Competition, Innovation, and Antitrust. A Theory of Market ... - Intertic

Contents
Preface .......................................................
vii
1. Competition, Leadership and Entry ....................... 1
1.1 ASimpleModelofCompetitioninQuantities.............. 4
1.1.1 MonopolyandAntitrustIssues..................... 5
1.1.2 NashEquilibrium ................................ 8
1.1.3 Marshall Equilibrium . ............................ 9
1.1.4 StackelbergEquilibrium........................... 10
1.1.5 StackelbergEquilibriumwithEndogenousEntry ..... 12
1.2 Increasing Marginal Costs and Product Differentiation ...... 15
1.2.1 U-shapedCostFunctions.......................... 16
1.2.2 Product Differentiation ........................... 18
1.3 ASimpleModelofCompetitioninPrices.................. 20
1.4 ASimpleModelofCompetitionfortheMarket ............ 25
1.4.1 TheArrow’sParadox ............................. 27
1.4.2 InnovationbyLeaders ............................ 31
1.5 Conclusions............................................ 34
1.6 Appendix ............................................. 36
2. Strategic Commitments and Endogenous Entry ........... 41
2.1 MarketStructure....................................... 44
2.2 Nash Equilibrium....................................... 48
2.3 Marshall Equilibrium ................................... 49
2.4 CompetitioninQuantities,inPricesandfortheMarket..... 50
2.4.1 CompetitioninQuantities......................... 50
2.4.2 CompetitioninPrices............................. 54
2.4.3 CompetitionfortheMarket........................ 58
2.5 StrategicInvestments ................................... 59
2.5.1 The Fudenberg-Tirole Taxonomy of Business Strategies 61
2.5.2 StrategicCommitmentswithEndogenousEntry...... 63
2.6 CostReductionsandSignaling ........................... 66
2.7 AdvertisingandDemandEnhancingInvestments ........... 70
2.8 DebtandtheOptimalFinancialStructure................. 72
2.9 NetworkExternalitiesandTwo-SidedMarkets ............. 76