Download This PaperStrategic Multi-Market Investment and Market Integration
19 Pages Posted: 9 Mar 2007
Date Written: March 6, 2007
Abstract
This paper presents a model of multi-market entry deterrence with or without market commitments. Sufficient conditions for entry deterrence in the multi-market game are derived. It is shown that to deter entry in the multi-market game, the first-mover installs strictly more production capacity than the capacity needed to deter entry, if it is possible to assign parts of the capacity to specific markets. Market integration for production capacity through harmonization of standards, unbundling of tradable goods and untradable services or cross-border mergers and acquisitions may, consequently, have a pro-competitive effect.
Keywords: entry deterrence, multi-market competition, market integration
JEL Classification: F12, F15, L12
Suggested Citation: Suggested Citation
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