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Title:The market entry paradox PDF Logo
Authors:Stähler, Frank
Issue Date: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
Appears in Collections:Kieler Arbeitspapiere, IfW
Publikationen von Forscherinnen und Forschern des IfW

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