The paper shows that Bertrand competition and contestability can be reconciled with sunk costs. When average total costs are constant over a range of output, marginal cost pricing does not conflict with the budget constraint faced by firms. Empirical observations support the notion of constant...

In this paper we show that the claim that the price in a Stackelberg model is lower than the price in a Cournot model, does not necessarily hold in an entry-deterrence framework. Using a signaling model of entry deterrence, we show that when post-entry competition is Stackelberg instead of...

In this paper the effects of different institutional scenarios on rent creation and rent distribution in a labour market are studied. Rent is generated by sinking costs in human capital investment and this rent is distributed between firms and workers by the wage set. In the bench-mark scenario...