In a model of horizontal product differentiation, we show that local monopolied may exist under free entry when capital is perfectly mobile. In contrast both with the situation of restricted entry and with the zero-profit approach to free entry outcomens of Salop 91979), the unit profit rate of...

This paper shows that a regulator should be careful when regulating a final product which industry is characterized by an unregulated essential facility sold through non-linear tariffs. Two regulatory environments are considered: the Laffont-Tirole framework with exogenous public funds and the...

We study the development of an industry-evolution of capacity, production and prices- in a continuous-time real-options model under various assumptions on competition. Investment takes the form of sequential acquisition of indivisible units of capacity. As benchmarks, we determine the optimal...