A Note on Credible Spatial Preemption in an Entry-Exit Game

Murooka, Takeshi

doi:10.2139/ssrn.1916232

Abstract

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A Note on Credible Spatial Preemption in an Entry-Exit Game

Takeshi Murooka

University of California, Berkeley - Department of Economics

August 21, 2012

Abstract:
I investigate how an incumbent firm deters entry by crowding the market, even when the incumbent can withdraw its stores in response to entry. In a two-location model, Judd (1985) shows such spatial entry deterrence is not credible. In contrast, I demonstrate spatial preemption can be credibly employed in a circular-city model if the incumbent can build its stores on sufficiently many locations and transportation costs are linear.

Number of Pages in PDF File: 6

Keywords: Spatial Preemption, Entry Deterrence, Product Differentiation

JEL Classification: C72, D42, L12

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Date posted: August 26, 2011 ; Last revised: August 22, 2012

Suggested Citation

Murooka, Takeshi, A Note on Credible Spatial Preemption in an Entry-Exit Game (August 21, 2012). Available at SSRN: http://ssrn.com/abstract=1916232 or http://dx.doi.org/10.2139/ssrn.1916232

Contact Information

Takeshi Murooka (Contact Author)

University of California, Berkeley - Department of Economics ( email )

508-1 Evans Hall #3880
Berkeley, CA 94720-3880
United States