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 |
|---|---|
| Article number | 4 |
| Pages (from-to) | 1-7 |
| Number of pages | 7 |
| Journal | Economics Bulletin |
| Volume | 12 |
| Issue number | 1 |
| Publication status | Published - 2004 |