This paper considers welfare effects of entry when the incumbent firmbehaves like a Stackelberg leader in the product market. In contrast to previous work(Klemperer, 1988, Journal of Industrial Economics), we show that entry may alwaysincrease welfare. Using general demand function, we show the...

This paper re-considers the comparison of Bertrand and Cournot equilibria in a differentiatedduopoly with linear demand and cost functions. It focuses on the case of substitutegoods, and allows for cost asymmetries between firms. The main finding is that, when thedegree of cost asymmetry is...

In a vertically separated industry, where the input suppliers have significantmarket power, not only entry but also the markets (upstream or downstream) withentry possibilities might be a concern to the policy makers. While ‘entry in thedownstream market only’ always increases welfare,...

This paper examines the validity of alternative assumptions aboutpublic enterprise strategies in the presence of both domestic and internationalcompetition. It extends the quantity-setting game to apreplay stage and endogenizes the firms’ order of moves to show thati) Cournot competition is...

The literature on technology licensing has ignored the importance ofmarket power of the input supplier. In this paper we examine the incentive forlicensing in the downstream industry when the firms in the upstream industry havemarket power. We show that licensing in the downstream industry is...