I study the effect of sunk entry-costs on potential competition in a multi-market framework, where potential entrants have different home market profits. Although sunk-entry-costs are supposed to increase entry barriers, my experimental results suggest that firms view entry costs differently...

The traditional description of Contestability theory considers the importance of potential entry threats in disciplining the incumbent firm in a natural monopoly market. Such a description however overlooks an important element in strategic interaction, that of an entrant firm having its own...