Abstract
We explore an investment game where industry sunk costs provide anincentive for a firm to be a follower into the market as opposedto a leader. For some parameter values, every firm could have adominant strategy to wait, even though immediate entry is sociallyoptimal - this is a like prisoners' dilemma. In equilibrium, afirm is more likely to have a dominant strategy to wait with anincrease in the number of potential entrants. Finally, theequilibrium can display an entry cascade.
Original language | English |
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Article number | 4 |
Pages (from-to) | 1-7 |
Number of pages | 7 |
Journal | Economics Bulletin |
Volume | 12 |
Issue number | 1 |
Publication status | Published - 2004 |