Excess Capacity as a Commitment to Promote Entry

Details

Serval ID
serval:BIB_B18B673E3682
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Excess Capacity as a Commitment to Promote Entry
Journal
Journal of Industrial Economics
Author(s)
Von Ungern-Sternberg T.
ISSN
0022-1821
Publication state
Published
Issued date
1988
Peer-reviewed
Oui
Volume
37
Number
2
Pages
113-122
Language
english
Abstract
Excess capacities held by a dominant firm are usually viewed as ant icompetitive because they constitute a barrier to entry. This paper explores an alternative reason for a dominant firm to hold excess capacities: they serve as an assurance to upstream (or downstream) companies that the dominant firm will not behave opportunistically once they have made their sunk investments. Excess capacities held for this reason lead to a welfare (Pareto) improvement.
Web of science
Create date
19/11/2007 10:45
Last modification date
20/08/2019 15:20
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