An infinite-horizon, stochastic model of entry and exit with sunk costs and imperfect competition is constructed. Simple examples provide insights into: (1) the relationship between sunk costs and industry concentration, (2) entry when current profits are negative, and (3) the relationship...

It is shown that optimal penal codes are security level penal codes in a general class of stochastic dynamic Bertrand games with capacity constraints. This result allows a more complete study of the behavior of collusion over the business cycle. In an illustrative linear duopoly example with...

Amir and Lambson (2003) developed an infinite-horizon, stochastic model of entry and exit by integer numbers of firms facing sunk costs and uncertain market conditions. Here, as examples of the model' usefulness, special cases are applied to the following three s issues: (1) the relationship...

This paper faces two questions concerning Joint Ventures (JV) agreements. First, we study how the partners contribution affect the creation and the profit sharing of a JV when partners' effort is not observable. Then, we see whether such agreements are easier to enforce when the decision on JV...

This paper first introduces an approach relying on market games to examine how successive oligopolies do operate between downstream and upstream markets. This approach is then compared with the traditional analysis of oligopolistic interaction in successive markets. The market outcomes resulting...

In this paper we address the following question: is it more profitable, for an entrant in a differentiated market, to acquire an existing firm than to compete? We illustrate the answer by considering competition in the banking sector.

This paper examines a three-stage model of divisionalization where, first, two parent firms create independent units, second, the parent firms allocate cost reduction levels over these units, and third, the resulting units compete in a Cournotmarket given their current costs of production. The...

The present work analyzes the effect of competition on managerial incentives when agents have private information about the firms' productivities. Two types of firms are considered: managerial firms (delegation) and entrepreneurial firms (no delegation). Due to the asymmetry of information...

The mininal core of strategic decisions a firm has to make is three-fold: What to produce? At which scale? At what price? A full-fledged theory of oligopolistic competition should be able to embrace these three dimensions jointly. Starting from the Cournot-Bertrand dispute and the stream of...

Many industries are made of a few big firms, which are able to manipulate the market outcome, and of a host of small businesses, each of which has a negligible impact on the market. We provide a general equilibrium framework that encapsulates both market structures. Due to the higher toughness...