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Strategic Investment and Market Integration

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  • Ganslandt, Mattias

    (The Research Institute of Industrial Economics)

Abstract

The competitive effect of international market integration in industries with imperfect competition is of great policy interest. This paper focuses on the link between monopolization and market segmentation. It presents a model of multi-market entry deterrence with or without market commitments. We derive sufficient conditions for entry deterrence with productive capacity in the multi-market game. It is shown that to deter entry in the multi-market game, the first-mover installs productions capacity which is strictly larger than the capacity needed to deter entry, if it is possible to assign parts of the capacity to specific markets. Market integration for production capacity may, thus, have a pro-competitive effect in international markets.

Suggested Citation

  • Ganslandt, Mattias, 2001. "Strategic Investment and Market Integration," Working Paper Series 560, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0560
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    File URL: https://www.ifn.se/Wfiles/wp/WP560.pdf
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Entry Deterrence; Multi-Market Competition; Market Integration;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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