Entry deterrence and entry accommodation strategies of a multiproduct firm regulated with dynamic price cap

• Type: Article in International Scientific Journal
• Date: 2007

Authors

Paula Sarmento (Author) FEP; António Brandão (Author) FEP

Journal

Title: International Advances in Economic Research

Vol. 13 No. 1

Pages: 19-34

ISSN: 1083-0898

Publisher: Springer Nature

Indexing

Scopus - 2 Citations

Other information

Authenticus ID: P-007-H5J

DOI: 10.1007/s11294-006-9058-7

Abstract (EN): In this paper we study the way a multiproduct firm, regulated through a dynamic price cap, can develop a price strategy that uses the regulatory policy to deter entry. We consider a firm that initially operates as a monopolist in two markets but faces potential entry in one of the markets. We conclude that the regulated firm can have the incentive to block the entry. This strategy leads to the reduction of the price in both markets. However, the final effect of the entry deterrence strategy on total consumer surplus is not always positive. © International Atlantic Economic Society 2006.

Language: English

Type (Professor's evaluation): Scientific