Conditions for Efficient Entry and Clustering

45 Pages Posted: 6 Dec 2021 Last revised: 8 Dec 2021

See all articles by Andrew Wait

Andrew Wait

University of Sydney

Vladimir Smirnov

The University of Sydney - School of Economics

Date Written: November 26, 2021


We outline the conditions for efficient entry order and clustering in a triopoly preemption game in which firms differ in their sunk costs of entry. The critical factor turns out to be how symmetric the potential entrants are. If the cost asymmetry between the firms is sufficiently large, entry is always in the efficient order. On the other hand, if firms are relatively symmetric, entry order can be inefficient in that the firm with the second-lowest entry cost enters first. Furthermore, if there is any difference in entry costs between the two most efficient firms, there is never clustering (which is when firms enter the market at the same time). Lastly, in contrast to the case with relatively symmetric firms, when the cost asymmetry between firms is large, the leader's entry time in the triopoly is always earlier than it is in a duopoly.

Keywords: timing games, asymmetric firms, clustering, inefficient entry

JEL Classification: C72, L13, O31, O33

Suggested Citation

Wait, Andrew and Smirnov, Vladimir, Conditions for Efficient Entry and Clustering (November 26, 2021). Available at SSRN: or

Andrew Wait (Contact Author)

University of Sydney ( email )

School of Economics
University of Sydney, NSW 2006
+61-2-9351-3060 (Phone)
+61-2-9351-4341 (Fax)


Vladimir Smirnov

The University of Sydney - School of Economics ( email )

Rm 370 Merewether (H04)
The University of Sydney
Sydney, NSW 2006 2008

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics