Post-entry Competition in the Plain Paper Copier Market

作者: Timothy F Bresnahan

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摘要: This paper reviews events in the plain copier (PPC) market immediately after Xerox's monopoly ended. behavior and that of a flood PPC entrants are viewed through lens recent advances theory entry deterrence. The early post-entry period also cast some interesting light on technological competition. modern deterrence rests simple, if not obvious, proposition. (socially) worst industry performance is entry, more monopolies there will be, since interests entrant society opposed once has occurred. A series papers have considered endogenous changes conditions competition-monopolists who make their competitive (conditional entry) order to deter potential entrants.' There two distinct steps entry-deterrence argument. First, it must be possible for during affect postentry Some intertemporal complication present, either costs or firm-specific demand, state at time form important "initial conditions" Second, monopolist find profitable manipulate initial by pre-entry action. general theoretical questions been quite specific terms problem One view emphasizes "Arrow effect" (Kenneth Arrow, 1962; Jennifer Reinganum, 1983; Drew Fudenberg Jean Tirole). Because any innovation destroys rents older products processes, incumbent monopolists smaller incentive innovate than entrants. Another (Richard Schmalensee, Richard Gilbert David Newbery, 1982) points out incumbent's losses from entrant's create motive preemptive R&D, product introduction, patenting. If incumbents leaders followers, second hold independent technology. Note difference over profitability deterring strategies. In both views, presence valuable assets like patents secrets provides necessary link. Events did substantial impact nature competition period. An Arrow effect evident, as other equilibrium explanations rapid decline. alternative explanation Xerox was "fat" below.

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