The first chapter is an introductory one. In chapter 2 I study the existence of oligopoly equilibria when firms have only a local knowledge of their demand curves. I introduce two notions of equilibrium: "local" and "first-orde'r" Nash equilibria. The first is a point where all firms are at a local maximum of their profit functions, the latter is.a point wh~re the first-order conditions for profit maximization are simultaneously satisfied for all firms (this is an equilibrium if each firm only knows the linear approximation to its own demand curve at that point). The main result is that a first-order equilibrium exists always, that is, with arbitrary demand functions. In chapter 3 I consider the problem of choice of product quality by two firms which enter the market simultaneously. I show that Hotelling's principle of minimum differentiation may hold or not, depending on the solution concept which is adopted for the post-entry game and on the structure of costs. In chapter 4 I re-examine the common claim that in the presence of threat of entry firms tend to produce more products than they would otherwise. I show that entry deterrence is always optimal, but it need not be achieved through p~oduct proliferation: in some cases the incumbent monopolist resorts to an entry-deterring strategy based on location choice rather than product proliferation. I also show that in some cases the number of products chosen by the incumbent facing the threat of entry is strictly greater than the minimum number required to deter entry. ,In chapter 5'1 show that advertising can be used as a barrier to entry even if there are no asymmetries in the effectiveness of advertising between existing ... f!irms ,and, new entrants .HI also show-that entry deterrence is achieved through "excessive" advertising.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:267267 |
| Date | January 1985 |
| Creators | Bonanno, Giacomo |
| Publisher | London School of Economics and Political Science (University of London) |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
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