We provide a new model that generates persistent performance differences amongst seemingly similar enterprises. Our model provides a mechanism whereby efficient incumbent rivals can give permission for an inefficient firm to exist in the presence of efficient entrants. We demonstrate that, in a...

In this paper we examine the effect of cooperation between complementary incumbent monopolists on consumer welfare. While divided technical leadership makes it difficult for firms to integrate into complementary markets, firms induce entry in complementary markets by reducing the cost of entry...

Barriers to entry are regarded as major impediments to the working of markets. Entry must not necessarily actually take place - the perceived threat of entry may encourage incumbent firms to behave as if they are in a competitive market, even if they are not. We present empirical evidence on...