This chapter discusses the difference between determinants of barriers to the mobility of capital and the welfare implications of entry and exit. The first task is confined for identifying situations in which a firm that is established in an industry benefits because of its incumbency. An...

We examine the effects of merger and merger policy on a potential entrant’s pre-merger investment incentives. We establish conditions under which the possibility of merger can induce an entrant to inefficiently imitate an incumbent’s product instead of innovating with a more differentiated...