EXCESS-ENTRY THEOREM: THE IMPLICATIONS OF LICENSING
We show that, in the presence of technology licensing, entry in an industry with Cournot competition may lead to a socially insufficient, number of firms. Insufficient entry occurs if the own marginal cost of the entrant is sufficiently high. Hence, the justification for anticompetitive entry regulation due to the standard excess-entry result may not be justified in the presence of licensing. However, if the own marginal cost of the entrant is very low, licensing may create excessive entry for those entry costs where entry does not occur without licensing; thus licensing reduces social welfare though it increases competition. Copyright © 2008 The Authors. Journal compilation © 2008 Blackwell Publishing Ltd and The University of Manchester.
Year of publication: |
2008
|
---|---|
Authors: | MUKHERJEE, ARIJIT ; MUKHERJEE, SOMA |
Published in: |
Manchester School. - School of Economics, ISSN 1463-6786. - Vol. 76.2008, 6, p. 675-689
|
Publisher: |
School of Economics |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Licensing by a monopolist and unionized labor market
Mukherjee, Soma, (2007)
-
BERTRAND VERSUS COURNOT COMPETITION IN A VERTICAL STRUCTURE: A NOTE
MUKHERJEE, ARIJIT, (2012)
-
Licensing by a monopolist and unionized labor market
Mukherjee, Soma, (2007)
- More ...