This thesis stresses the existence of a fundamental link between potential competition and multi-product activity. Potential competitors are identified as already-existing firms that possess "latent capacity", a principal source of scope economies, which enable firms to expand or alter their product portfolio in the short period. When latent capacity is accompanied by certain sunk costs, hit-and-run entry becomes profitable as the "latent competitor" is able to easily surmount the major barriers to entry, avoid the disadvantages in cost associated with small batch production, and exit cheaply from the various markets. This new theory of potential competition further demonstrates that when framed within a multi-product environment, the major criticisms that are levelled against the theory of contestability can be addressed. Additionally, it shows how the age-old conundrum of increasing returns and competitive behaviour may be reconciled. Empirical evidence confirms the existence of latent capacity. Such capacity is embodied in the Flexible Manufacturing Systems (FMS) and flexible manpower resources that are increasingly being employed by firms.
| Identifer | oai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:QMM.28832 |
| Date | January 1994 |
| Creators | Mahabir, Dhanayshar |
| Contributors | Rowley, J. C. (advisor) |
| Publisher | McGill University |
| Source Sets | Library and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada |
| Language | English |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Format | application/pdf |
| Coverage | Doctor of Philosophy (Department of Economics.) |
| Rights | All items in eScholarship@McGill are protected by copyright with all rights reserved unless otherwise indicated. |
| Relation | alephsysno: 001446307, proquestno: NN05749, Theses scanned by UMI/ProQuest. |
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