Working Paper Series
Strategic Investment and Market Integration
Abstract: The competitive effect of international market integration
in industries with imperfect competition is of great policy interest. This
paper focuses on the link between monopolization and market segmentation.
It presents a model of multi-market entry deterrence with or without market
commitments. We derive sufficient conditions for entry deterrence with
productive capacity in the multi-market game. It is shown that to deter
entry in the multi-market game, the first-mover installs productions
capacity which is strictly larger 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 may, thus, have a
pro-competitive effect in international markets.
Keywords: Entry Deterrence; Multi-Market Competition; Market Integration; (follow links to similar papers)
JEL-Codes: F12; F15; L12; (follow links to similar papers)
30 pages, June 27, 2001
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