The role of fixed entry costs in an evolutionary entry game with bertrand players

2005-01-01
Soytaş, Uğur
This paper analyzes the role of fixed costs in an evolutionary entry game with Bertrand players. A stable state fails to exist when entry is free, regardless of whether capacity constraints are present or not. When a fixed entry cost is introduced, there is a unique evolutionarily stable strategy (ESS) identical to the ESS outcome of Soytas and Becker (2003) and resembling the separating equilibrium of Milgrom and Roberts (1982). The unique ESS emerges even when capacity constraints are imposed. However, the fixed cost must be sufficiently large for the ESS to prevail if the incumbent has capacity limitations.
Citation Formats
U. Soytaş, “The role of fixed entry costs in an evolutionary entry game with bertrand players,” pp. 207–219, 2005, Accessed: 00, 2021. [Online]. Available: https://hdl.handle.net/11511/77440.