Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92850
Authors: 
Creane, Anthony
Miyagiwa, Kaz
Year of Publication: 
2007
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 702
Abstract: 
AT&T was known for both funding a world-class research lab and delaying deployment of useful innovations from the lab. To explain this behavior we consider a model with an incumbent facing a potential entrant. The incumbent can choose from two technologies for production: old and new. The entrant's choice is limited to the old. We show that, under correlated production uncertainty, use of the common technology exposes the entrant to a greater risk. Therefore, the incumbent may suppress a newer, more efficient technology in favor of the old as a means to deter entry.
Subjects: 
technology choice
entry deterrence
production shocks
correlations of strategies
JEL: 
D83
L12
L13
Document Type: 
Working Paper

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