Access the full text.
Sign up today, get DeepDyve free for 14 days.
Loading next page...
/lp/american-economic-association/the-role-of-potential-competition-in-industrial-organization-ubHndxeaYd
References (61)
-
D. Coursey, R. Isaac, M. Luke, V. Smith (1984)
Market Contestability in the Presence of Sunk (Entry) CostsThe RAND Journal of Economics, 15
-
J. Clark, J. Clark
The control of trusts -
W. Baumol, J. Panzar, R. Willig (1986)
On the Theory of Perfectly-Contestable Markets -
W. Baumol, R. Willig (1986)
Contestability: Developments Since the Book, 38
-
W. Baumol, E. Bailey, J. Panzar, R. Willig (1982)
Contestable Markets and the Theory of Industry Structure -
Jeremy Bulow, J. Geanakoplos, P. Klemperer (1985)
Holding Idle Capacity to Deter Entry [The Role of Investment in Entry Deterrence]The Economic Journal, 95
-
W. Baumol (1982)
Contestable Markets: An Uprising in the Theory of Industry StructureThe American Economic Review, 72
-
R. Gilbert, C. Matutes (1993)
Product line rivalry with brand differentiationJournal of Industrial Economics, 41
-
Sanford Grossman (1981)
Nash Equilibrium and the Industrial Organization of Markets with Large Fixed CostsEconometrica, 49
-
R. Gilbert, Richard Harris (1984)
Competition with Lumpy Investment -
K. Forbes, D. Mueller (1987)
Profits in the Long RunSouthern Economic Journal, 54
-
H. Demsetz (1981)
Barriers to EntryThe American Economic Review, 72
-
R. Caves, M. Porter (1977)
From Entry Barriers to Mobility Barriers: Conjectural Decisions and Contrived Deterrence to New CompetitionQuarterly Journal of Economics, 91
-
G. Bonanno (1987)
Location Choice, Product Proliferation and Entry DeterrenceThe Review of Economic Studies, 54
-
R. Gilbert (1987)
Investment and Coordination in Oligopolistic Industries -
R. Masson, Joseph Shaanan (1986)
Excess Capacity and Limit Pricing: An Empirical TestEconomica, 53
-
John Hause, Gunnar Rietz (1984)
Entry, Industry Growth, and the Microdynamics of Industry SupplyJournal of Political Economy, 92
-
W. Comanor, T. Wilson (1967)
Advertising Market Structure and PerformanceThe Review of Economics and Statistics, 49
-
James Chrisman, Charles Hofer (1984)
Corporate diversification: Entry, strategy, and performance -
M. Kamien, N. Schwartz (1971)
LIMIT PRICING AND UNCERTAIN ENTRYEconometrica, 39
-
T. Omori, G. Yarrow (1982)
Product diversification, entry prevention and limit pricingThe Bell Journal of Economics, 13
-
H. Demsetz (1973)
Industry Structure, Market Rivalry, and Public PolicyThe Journal of Law and Economics, 16
-
Judith Gelman, S. Salop (1983)
Judo Economics: Capacity Limitation and Coupon CompetitionThe Bell Journal of Economics, 14
-
A. Dixit (1980)
The Role Of Investment In Entry-Deterrence -
A. Dixit (1978)
A MODEL OF DUOPOLY SUGGESTING A THEORY OF ENTRY BARRIERSThe Bell Journal of Economics, 10
-
M. Schwartz (1986)
The Nature and Scope of Contestability Theory, 38
-
S. Salop (1979)
Strategic Entry DeterrenceThe American Economic Review, 69
-
D. West (1981)
Testing for Market Preemption Using Sequential Location Data: ReplyThe Bell Journal of Economics, 12
-
P. Aghion, P. Bolton (1987)
Contracts as a barrier to entryThe American Economic Review, 77
-
Joseph Farrell (1986)
How effective is potential competitionEconomics Letters, 20
-
D. Orr (1974)
AN INDEX OF ENTRY BARRIERS AND ITS APPLICATION TO THE MARKET STRUCTURE PERFORMANCE RELATIONSHIPJournal of Industrial Economics, 23
-
Joseph Farrell (1986)
Moral hazard as an entry barrierThe RAND Journal of Economics, 17
-
F. Modigliani (1958)
New Developments on the Oligopoly FrontJournal of Political Economy, 66
-
J. Bain (1957)
Barriers to new competition -
M. Foster (1983)
Barriers to Entry: A Corporate-Strategy Perspective -
D. Gaskins (1971)
Dynamic limit pricing: Optimal pricing under threat of entryJournal of Economic Theory, 3
-
P. Geroski, A. Jacquemin (1990)
Barriers to Entry and Strategic Competition -
R. Masson, Joseph Shaanan (1982)
Stochastic-Dynamic Limiting Pricing: An Empirical TestThe Review of Economics and Statistics, 64
-
C. Weizsaker (1980)
A Welfare Analysis of Barriers to EntryThe Bell Journal of Economics, 11
-
Joseph Farrell, C. Shapiro (1988)
Dynamic Competition with Switching Costs -
M. Blaug, P. Sylos-Labini (1965)
Oligopoly and Technical Progress.The Economic Journal, 75
-
Gregory Call, T. Keeler (1985)
AIRLINE DEREGULATION, FARES, AND MARKET BEHAVIOR: SOME EMPIRICAL EVIDENCE -
A. Spence (1977)
Entry, Capacity, Investment and Oligopolistic PricingThe Bell Journal of Economics, 8
-
Paul Milgrom, John Roberts (1982)
LIMIT PRICING AND ENTRY UNDER INCOMPLETE INFORMATION: AN EQUILIBRIUM ANALYSIS'Econometrica, 50
-
D. Coursey, R. Isaac, V. Smith (1984)
Natural Monopoly and Contested Markets: Some Experimental ResultsThe Journal of Law and Economics, 27
-
A. Kahn (1988)
Surprises of Airline DeregulationThe American Economic Review, 78
-
A. Pakes (1987)
Mueller's Profits in the Long RunThe RAND Journal of Economics, 18
-
G. Harrison, M. McKee (1985)
Monopoly Behavior, Decentralized Regulation, and Contestable Markets: An Experimental EvaluationThe RAND Journal of Economics, 16
-
J. Stiglitz, G. Mathewson (1986)
New Developments in the Analysis of Market StructureAmerican Journal of Agricultural Economics, 1
-
J. Friedman (1979)
On Entry Preventing Behavior and Limit Price Models of Entry -
E. Bailey, J. Panzar (1981)
THE CONTESTABILITY OF AIRLINE MARKETS DURING THE TRANSITION TO DEREGULATION. IN: AIR TRANSPORTClassics in Transport Analysis
-
S. Morrison, C. Winston (1987)
Empirical Implications and Tests of the Contestability HypothesisThe Journal of Law and Economics, 30
-
R. Schmalensee (1978)
Entry Deterrence in the Ready-to-Eat Breakfast Cereal IndustryThe Bell Journal of Economics, 9
-
M. Weitzman (1983)
Contestable Markets: An Uprising in the Theory of Industry Structure: CommentThe American Economic Review, 73
-
J. Stiglitz (1981)
Potential Competition May Reduce WelfareThe American Economic Review, 71
-
D. Mueller (1977)
The Persistence of Profits above the NormEconomica, 44
-
G. Stigler (1969)
The Organization of Industry -
D. Caves, L. Christensen, M. Tretheway (1984)
Economies of Density versus Economies of Scale: Why Trunk and Local Service Airline Costs DifferThe RAND Journal of Economics, 15
-
K. Judd (1985)
Credible Spatial PreemptionThe RAND Journal of Economics, 16
-
J. Stiglitz (1987)
Technological Change, Sunk Costs, and Competition, 18
-
D. Fudenberg, J. Tirole (1984)
The Fat-Cat Effect, the Puppy-Dog Ploy, and the Lean and Hungry LookThe American Economic Review, 74
- Publisher
- American Economic Association
- Copyright
- Copyright © 1989 by the American Economic Association
- Subject
- Articles
- ISSN
- 0895-3309
- DOI
- 10.1257/jep.3.3.107
- Publisher site
- See Article on Publisher Site
Abstract
Abstract Potential competition is important as a mechanism to control market power. I assess the strengths and limitations of alternative theories of potential competition by examining the available theoretical, empirical and institutional knowledge. I consider four major schools of thought: the traditional model of limit pricing, dynamic limit pricing, the theory of contestable markets, and the market efficiency model. Traditional limit pricing models rest on the assumption that firms respond to entry but are able to earn persistent profits when the structural characteristics of markets make entry difficult. Dynamic limit pricing is similar, but emphasizes that markets can only be temporarily protected from entry. Contestability theory, in its pure form, asserts that potential competition is as effective as actual competition in controlling market performance. The efficient markets hypothesis, broadly interpreted, states that markets are workably competitive and that the market structure reflects differential efficiency, not strategic behavior.
Journal
Journal of Economic Perspectives – American Economic Association
Published: Aug 1, 1989