Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46836
Authors: 
Stähler, Frank
Year of Publication: 
1996
Series/Report no.: 
Kiel Working Papers 777
Abstract: 
This paper discusses a simultaneous market entry game between two firms with different fixed costs. This case is a typical application of mixed strategy equilibria. Conventional wisdom would suggest that the low-cost firm is more likely to enter the market. This presumption is wrong. Instead, the paper demonstrates a market entry paradox: the equilibrium probability of entry is higher for the high-cost firm than the equilibrium probability of entry of the low-cost firm.
Subjects: 
Market entry
mixed strategy equilibrium
JEL: 
D43
L13
Document Type: 
Working Paper

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