On the Effects of Entry Under Flexible Production Techniques: An Example of Quasi-Anticompetitiveness

10 Pages Posted: 19 Dec 2006

See all articles by Emanuele Bacchiega

Emanuele Bacchiega

University of Bologna - Department of Economics

Paolo G. Garella

University of Milan - Dipartimento di Scienze Economiche, Aziendali e Statistiche

Date Written: December 2006

Abstract

We study reactions to entry in a Cournot model, contrasting the case where firms are endowed with unchangeable technologies against that where technologies are flexible. By the latter we mean that firms can change the installed production technique at zero cost (fully flexible technologies). We show that when firms are technologically flexible, entry can increase equilibrium prices. The analysis is cast in a short-run time horizon to simplify exposition, but its predictive power may better relate to the long run.

Keywords: Entry, Technological Flexibility, Oligopoly Theory

JEL Classification: D43, L1, L11, L13

Suggested Citation

Bacchiega, Emanuele and Garella, Paolo G., On the Effects of Entry Under Flexible Production Techniques: An Example of Quasi-Anticompetitiveness (December 2006). Available at SSRN: https://ssrn.com/abstract=951647 or http://dx.doi.org/10.2139/ssrn.951647

Emanuele Bacchiega (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
40126 Bologna, 40125
Italy
+390512098486 (Phone)
+390512098493 (Fax)

Paolo G. Garella

University of Milan - Dipartimento di Scienze Economiche, Aziendali e Statistiche ( email )

via Conservatorio 7
Milano, 20122
Italy

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