IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v118y2013i1p26-28.html
   My bibliography  Save this article

A note on credible spatial preemption in an entry–exit game

Author

Listed:
  • Murooka, Takeshi

Abstract

I investigate how an incumbent firm deters entry by crowding the market, even when the incumbent can withdraw its stores in response to entry. In a two-location model, Judd (1985) shows such spatial entry deterrence is not credible. In contrast, I demonstrate spatial preemption can be credibly employed in a circular-city model if the incumbent can build its stores on sufficiently many locations and transportation costs are linear.

Suggested Citation

  • Murooka, Takeshi, 2013. "A note on credible spatial preemption in an entry–exit game," Economics Letters, Elsevier, vol. 118(1), pages 26-28.
    • Handle: RePEc:eee:ecolet:v:118:y:2013:i:1:p:26-28
    DOI: 10.1016/j.econlet.2012.09.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176512005125
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2012.09.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kenneth L. Judd, 1985. "Credible Spatial Preemption," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 153-166, Summer.
    2. Kats, Amoz, 1995. "More on Hotelling's stability in competition," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 89-93, March.
    3. Belleflamme,Paul & Peitz,Martin, 2010. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9780521681599, November.
    4. Richard Schmalensee, 1978. "Entry Deterrence in the Ready-to-Eat Breakfast Cereal Industry," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 305-327, Autumn.
    5. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    6. Partha Dasgupta & Eric Maskin, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, II: Applications," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(1), pages 27-41.
    7. Ishibashi, Ikuo, 2003. "A note on credible spatial entry deterrence," International Journal of Industrial Organization, Elsevier, vol. 21(2), pages 283-289, February.
    8. Ashiya, Masahiro, 2000. "Weak entrants are welcome," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 975-984, August.
    9. Martinez-Giralt, Xavier & Neven, Damien J, 1988. "Can Price Competition Dominate Market Segmentation?," Journal of Industrial Economics, Wiley Blackwell, vol. 36(4), pages 431-442, June.
    10. Vickrey, William S. & Anderson, Simon P. & Braid, Ralph M., 1999. "Spatial competition, monopolistic competition, and optimum product diversity," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 953-963, October.
    11. Gillian K. Hadfield, 1991. "Credible Spatial Preemption through Franchising," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 531-543, Winter.
    12. Masahiro Ashiya, 2002. "Sequential Entry in a Vertically Differentiated Market," The Japanese Economic Review, Japanese Economic Association, vol. 53(3), pages 315-336, September.
    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. Sawoong Kang & Jeong-Yoo Kim, 2022. "Credible spatial preemption in a mixed oligopoly," Journal of Economics, Springer, vol. 137(2), pages 171-190, October.
    2. Yi-Ling Cheng & Takatoshi Tabuchi, 2018. "Product Proliferation and First Mover Advantage in a Multiproduct Duopoly," CIRJE F-Series CIRJE-F-1091, CIRJE, Faculty of Economics, University of Tokyo.
    3. Kosuke Hirose & Toshihiro Matsumura, 2016. "Payoff interdependence and the multi-store paradox," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 23(3), pages 256-267, July.

    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. Ishibashi, Ikuo, 2003. "A note on credible spatial entry deterrence," International Journal of Industrial Organization, Elsevier, vol. 21(2), pages 283-289, February.
    2. Sawoong Kang & Jeong-Yoo Kim, 2022. "Credible spatial preemption in a mixed oligopoly," Journal of Economics, Springer, vol. 137(2), pages 171-190, October.
    3. Ashiya, Masahiro, 2000. "Weak entrants are welcome," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 975-984, August.
    4. Kosuke Hirose & Toshihiro Matsumura, 2016. "Payoff interdependence and the multi-store paradox," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 23(3), pages 256-267, July.
    5. Ikuo Ishibashi & Noriaki Matsushima, 2006. "Inviting entrants may help incumbent firms," Discussion Papers 2006-46, Kobe University, Graduate School of Business Administration.
    6. Yi-Ling Cheng & Takatoshi Tabuchi, 2018. "Product Proliferation and First Mover Advantage in a Multiproduct Duopoly," CIRJE F-Series CIRJE-F-1091, CIRJE, Faculty of Economics, University of Tokyo.
    7. Jean J. Gabszewicz & Jacques-François Thisse, 2000. "Microeconomic theories of imperfect competition," Cahiers d'Économie Politique, Programme National Persée, vol. 37(1), pages 47-99.
    8. Ashiya, M., 1999. "Brand Proliferation is Useless to Deter Entry," ISER Discussion Paper 0476, Institute of Social and Economic Research, Osaka University.
    9. Gonzalez-Maestre, Miguel, 2001. "Divisionalization with spatial differentiation," International Journal of Industrial Organization, Elsevier, vol. 19(8), pages 1297-1313, September.
    10. Plan, Asaf, 2023. "Symmetry in n-player games," Journal of Economic Theory, Elsevier, vol. 207(C).
    11. Takatoshi Tabuchi, 2009. "Hotelling's Spatial Competition Reconsidered," CIRJE F-Series CIRJE-F-674, CIRJE, Faculty of Economics, University of Tokyo.
    12. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
    13. Ralph M. Braid, 2016. "Potential merger-forcing entry reduces maximum spacing between firms in spatial competition," Papers in Regional Science, Wiley Blackwell, vol. 95(3), pages 653-669, August.
    14. Toshihiro Matsumura, 2003. "Consumer-benefiting exclusive territories," Canadian Journal of Economics, Canadian Economics Association, vol. 36(4), pages 1007-1025, November.
    15. Yogesh V. Joshi & David J. Reibstein & Z. John Zhang, 2016. "Turf Wars: Product Line Strategies in Competitive Markets," Marketing Science, INFORMS, vol. 35(1), pages 128-141, January.
    16. Gupta, Barnali & Lai, Fu-Chuan & Pal, Debashis & Sarkar, Jyotirmoy & Yu, Chia-Ming, 2004. "Where to locate in a circular city?," International Journal of Industrial Organization, Elsevier, vol. 22(6), pages 759-782, June.
    17. Aguirre, Inaki & Espinosa, Maria Paz & Macho-Stadler, Ines, 1998. "Strategic entry deterrence through spatial price discrimination," Regional Science and Urban Economics, Elsevier, vol. 28(3), pages 297-314, May.
    18. de Haas, Samuel & Herold, Daniel & Schäfer, Jan Thomas, 2022. "Entry deterrence due to brand proliferation: Empirical evidence from the German interurban bus industry," International Journal of Industrial Organization, Elsevier, vol. 83(C).
    19. Haimanti Bhattacharya & Robert Innes, 2016. "Concentration, Product Variety, and Entry-for-Merger: Evidence from New Product Introductions in the U.S. Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1360-1376.
    20. Chrysovalantou Milliou & Joel Sandonis, 2018. "Manufacturer Mergers and Product Variety in Vertically Related Markets," Journal of Industry, Competition and Trade, Springer, vol. 18(1), pages 1-24, March.

    More about this item

    Keywords

    Spatial preemption; Entry deterrence; Product differentiation;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

    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:eee:ecolet:v:118:y:2013:i:1:p:26-28. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    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.