IDEAS home Printed from https://ideas.repec.org/a/bla/jemstr/v2y1993i1p41-70.html
   My bibliography  Save this article

Diversification as a Strategic Preemptive Weapon

Author

Listed:
  • Aron, Debra J

Abstract

This article examines the role that multimarket operations play in a firm's ability to preempt entry into new markets when presence in a market does not commit the firm to remain there. Success in one market affects a firm's incentives and, in turn, strategic power, to fight a rival for survival in a related market. This is modeled as a war of attrition, and the risk-dominant equilibrium is derived. The model supports brand proliferation as a credible preemptive strategy for an established firm and also has implications regarding the strategic role of economies of scope and "deep pockets." Copyright 1993 by MIT Press.

Suggested Citation

  • Aron, Debra J, 1993. "Diversification as a Strategic Preemptive Weapon," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 2(1), pages 41-70, Spring.
    • Handle: RePEc:bla:jemstr:v:2:y:1993:i:1:p:41-70
    DOI: 10.1111/j.1430-9134.1993.00041.x
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    References listed on IDEAS

    as
    1. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, April.
    2. Matsui Akihiko & Matsuyama Kiminori, 1995. "An Approach to Equilibrium Selection," Journal of Economic Theory, Elsevier, vol. 65(2), pages 415-434, April.
    3. Simon, Leo K & Stinchcombe, Maxwell B, 1989. "Extensive Form Games in Continuous Time: Pure Strategies," Econometrica, Econometric Society, vol. 57(5), pages 1171-1214, September.
    4. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
    5. Fudenberg, Drew & Tirole, Jean, 1983. "Capital as a commitment: Strategic investment to deter mobility," Journal of Economic Theory, Elsevier, vol. 31(2), pages 227-250, December.
    6. repec:hoo:wpaper:e-91-14 is not listed on IDEAS
    7. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    8. B. Curtis Eaton & Richard G. Lipsey, 1980. "Exit Barriers are Entry Barriers: The Durability of Capital as a Barrier to Entry," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 721-729, Autumn.
    9. Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 72(3), pages 514-526, June.
    10. Reinganum, Jennifer F, 1983. "Uncertain Innovation and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 73(4), pages 741-748, September.
    11. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    12. Bulow, Jeremy & Geanakoplos, John & Klemperer, Paul, 1985. "Holding Idle Capacity to Deter Entry [The Role of Investment in Entry Deterrence]," Economic Journal, Royal Economic Society, vol. 95(377), pages 178-182, March.
    13. Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-122, February.
    14. repec:hoo:wpaper:e-93-7 is not listed on IDEAS
    15. Scherer, F M, 1979. "The Welfare Economics of Product Variety: An Application to the Ready-to-Eat Cereals Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 28(2), pages 113-134, December.
    16. Morton I. Kamien & Nancy L. Schwartz, 1978. "Potential Rivalry, Monopoly Profits and the Pace of Inventive Activity," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 45(3), pages 547-557.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bourreau, Marc, 2004. "The impact of uncertainty about demand growth on preemption," Journal of Economics and Business, Elsevier, vol. 56(5), pages 363-376.
    2. Garcia-Gallego, Aurora & Georgantzis, Nikolaos, 2001. "Multiproduct activity in an experimental differentiated oligopoly," International Journal of Industrial Organization, Elsevier, vol. 19(3-4), pages 493-518, March.
    3. Paul W. Dobson & Michael Waterson, 1996. "Product Range and Interfirm Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(3), pages 317-341, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thijssen, J.J.J., 2003. "Investment under uncertainty, market evolution and coalition spillovers in a game theoretic perspective," Other publications TiSEM 672073a6-492e-4621-8d4a-0, Tilburg University, School of Economics and Management.
    2. Michael Waldman, 1987. "Underinvestment in Entry Deterrence: When and Why," UCLA Economics Working Papers 456, UCLA Department of Economics.
    3. Philipp Weinschenk, 2009. "Persistence of Monopoly and Research Specialization," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2009_11, Max Planck Institute for Research on Collective Goods.
    4. Barrie R. Nault & Mark B. Vandenbosch, 2000. "Research Report: Disruptive Technologies—Explaining Entry in Next Generation Information Technology Markets," Information Systems Research, INFORMS, vol. 11(3), pages 304-319, September.
    5. Bourreau, Marc, 2004. "The impact of uncertainty about demand growth on preemption," Journal of Economics and Business, Elsevier, vol. 56(5), pages 363-376.
    6. Arping, Stefan & Diaw, Khaled M., 2008. "Sunk costs, entry deterrence, and financial constraints," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 490-501, March.
    7. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899.
    8. Robin Boadway & Jean-François Tremblay, 2003. "Public Economics and Startup Entrepreneurs," CESifo Working Paper Series 877, CESifo.
    9. Ennis, Huberto M. & Keister, Todd, 2005. "Government policy and the probability of coordination failures," European Economic Review, Elsevier, vol. 49(4), pages 939-973, May.
    10. Aslan, Hadiye & Kumar, Praveen, 2016. "The product market effects of hedge fund activism," Journal of Financial Economics, Elsevier, vol. 119(1), pages 226-248.
    11. Lu, Yuanzhu & Poddar, Sougata, 2005. "Mixed oligopoly and the choice of capacity," Research in Economics, Elsevier, vol. 59(4), pages 365-374, December.
    12. Jun Honda, 2015. "Games with the Total Bandwagon Property," Department of Economics Working Papers wuwp197, Vienna University of Economics and Business, Department of Economics.
    13. , & , & ,, 2008. "Monotone methods for equilibrium selection under perfect foresight dynamics," Theoretical Economics, Econometric Society, vol. 3(2), June.
    14. Argyres, Nicholas S. & Liebeskind, Julia Porter, 2002. "Governance inseparability and the evolution of US biotechnology industry," Journal of Economic Behavior & Organization, Elsevier, vol. 47(2), pages 197-219, February.
    15. Aggarwal, Rimjhim & Narayan, Tulika A., 2000. "Does Inequality Lead To Greater Efficiency In The Use Of Local Commons? The Role Of Strategic Investments In Capacity," Working Papers 28572, University of Maryland, Department of Agricultural and Resource Economics.
    16. Shota Fujishima, 2015. "The emergence of cooperation through leadership," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(1), pages 17-36, February.
    17. Asplund, Marcus, 2002. "Risk-averse firms in oligopoly," International Journal of Industrial Organization, Elsevier, vol. 20(7), pages 995-1012, September.
    18. Oyama, Daisuke & Tercieux, Olivier, 2009. "Iterated potential and robustness of equilibria," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1726-1769, July.
    19. Jasmina Arifovic & Cars Hommes & Anita Kopányi-Peuker & Isabelle Salle, 2023. "Ten Isn't Large! Group Size and Coordination in a Large-Scale Experiment," American Economic Journal: Microeconomics, American Economic Association, vol. 15(1), pages 580-617, February.
    20. Flavio DelbonoBy & Luca Lambertini, 2022. "Innovation and product market concentration: Schumpeter, arrow, and the inverted U-shape curve [Lessons from schumpeterian growth theory]," Oxford Economic Papers, Oxford University Press, vol. 74(1), pages 297-311.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jemstr:v:2:y:1993:i:1:p:41-70. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.kellogg.northwestern.edu/research/journals/JEMS/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.