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Article
On the effects of entry
Econometrica
  • Jesús SEADE, University of Warwick
Document Type
Article
Publication Date
3-1-1980
Disciplines
Abstract

The effects of entry into an oligopolistic industry are studied, generalizing the usual Cournot model to allow for the possibility of collusion by firms and deriving stronger results than had previously been obtained. Necessary and sufficient conditions for output per firm y to rise or fall as entry occurs are given and discussed, and the "perverse" effect (entry increasing y) is shown to be consistent with stable equilibria and not empirically implausible. In contrast, it is shown that industry output unambiguously expands and profits per firm fall as entry into stable equilibria takes place. Total industry profits are also considered and some results obtained.

DOI
10.2307/1911111
Citation Information
Seade, J. (1980). On the effects of entry. Econometrica, 48(2), 479-489. doi: 10.2307/1911111