Work

Optimal entry deterrence under uncertainty

Year: 2025

Type: article

Abstract: The objective of this paper is to analyze an incumbent–entrant model under uncertainty. The entrant observes the realization of the random variable(s) prior to making decisions regarding market entry and capacity selection, leaving the uncertainty entirely on the incumbent’s side. The sources of this uncertainty pertain to the characteristics of the entrant’s product and the entry costs the entrant must incur before becoming operational. The key findings indicate that uncertainty generally enhances entry, and, apart from blockaded entry, entry deterrence and accommodated entry, the incumbent can pursue entry deterrence with a certain probability.

Source: Central European Journal of Operations Research

DOI: 10.1007/s10100-025-00966-z

Authors: Richard F. Hartl, Peter M. Kort, Stefan Wrzaczek

Institutions: University of Vienna, Tilburg University, International Institute for Applied Systems Analysis, Vienna Institute of Demography

Language: English

Topic: Merger and Competition Analysis

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $2,990

Funder: International Institute for Applied Systems Analysis