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Noncooperative Behavior by a Cartel as an Entry-Deterring Signal

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  • Joseph E. Harrington Jr.

Abstract

Recent work has investigated the effect of a potential entrant's uncertainty about postentry profits on the likelihood of his entering the market. It has always been assumed that the potential entrant knows the type of postentry solution, but lacks information on cost or as to whether the postentry solution will be cooperative or noncooperative. We find that entry is more likely, the greater is the preentry profit rate. In equilibrium, the threat of entry then forces the incumbent firms to act more competitively to deter entry.

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  • Joseph E. Harrington Jr., 1984. "Noncooperative Behavior by a Cartel as an Entry-Deterring Signal," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 426-433, Autumn.
    • Handle: RePEc:rje:randje:v:15:y:1984:i:autumn:p:426-433
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    1. repec:spo:wpecon:info:hdl:2441/7o52iohb7k6srk09mit038srm is not listed on IDEAS
    2. repec:hal:wpspec:info:hdl:2441/7o52iohb7k6srk09mit038srm is not listed on IDEAS
    3. repec:hal:spmain:info:hdl:2441/7o52iohb7k6srk09mit038srm is not listed on IDEAS
    4. Joseph Shaanan, 2006. "Ricardian or Monopoly Rents? The Perspective of Potential Entrants," Eastern Economic Journal, Eastern Economic Association, vol. 32(1), pages 19-30, Winter.
    5. repec:spo:wpmain:info:hdl:2441/7o52iohb7k6srk09mit038srm is not listed on IDEAS
    6. Fabien Bertho, 2012. "The impact of liner shipping trade and competition regulations on the market structure, maritime transport costs and seaborne trade flows [Les réglementations commerciales et concurrentielles dans ," SciencePo Working papers Main tel-03675986, HAL.
    7. Lucio Fuentelsaz, 1996. "Dinámica de la competencia entre cajas de ahorros españolas," Investigaciones Economicas, Fundación SEPI, vol. 20(1), pages 125-141, January.

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