Strategic Investment and Market Integration



From (S), we have x'. = x%--ιx kn-23x. If (D) holds with equality, i.e. x = xm, then
the LHS of equality
[14] equals to zero and the equality is satished if and only if kn-2 x =
2
χm kn-1 = x + 2xm. Work in the same way inductively to period 1. In period 1, we have
x= x^-1 = ■■ = '∙l'-2 > x k > nx and as (D) holds with equality kn-ι = x + (n 1) xm. The
entry deterring capacity k
1 is implicitly dehned by

— (x, β1 (T)) = — ( kL-Ξ. ,for t = 2,..,n                (16)

x^ V ,f ( )Jxψ \— 1 , 1             , ,                            ( )

and we conclude that k1 (nx, x + (n 1) Tm].

Step 5. In a subgame without entry

v / mV k k

dx™  '1 ,o) — ∂W ( n 1 , 0J=0                        (17)

and x= k∕nxm for all t = 1,..., n. Hence, the entire capacity will be used in an equilibrium
without entry. No capacity is left idle.

Step 6. Working backward to period 0, the incumbent would install k1 to deter entry in all markets.

27



More intriguing information

1. A Study of Adult 'Non-Singers' In Newfoundland
2. The name is absent
3. Direct observations of the kinetics of migrating T-cells suggest active retention by endothelial cells with continual bidirectional migration
4. Activation of s28-dependent transcription in Escherichia coli by the cyclic AMP receptor protein requires an unusual promoter organization
5. Survey of Literature on Covered and Uncovered Interest Parities
6. Spatial patterns in intermunicipal Danish commuting
7. The name is absent
8. Evaluating the Success of the School Commodity Food Program
9. The name is absent
10. The Role of area-yield crop insurance program face to the Mid-term Review of Common Agricultural Policy