Laye, Maximilien (2006) Strategic use of capacity and financial structure in entry games. PhD thesis Département d'Economie, Economie, EP/X p.167.
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Alternative Locations: http://www.imprimerie.polytechnique.fr/Theses/Files/Laye.pdf
Abstract
The thesis focuses on the strategic choices of production capacity and financial structure in entry games.
Chapter 1 is based on Judo-economics analysis (Gelman and Salop (1983)). We show that there is no over-capacity at equilibrium when the entry is anticipated by the incumbent. In a first extension, firms can collude on production level. We show that this collusion induces firms to install an over-capacity, in order to be in a better position during negotiation. In a second extension, we show that a low-cost entrant may install an over-capacity in order to signal its efficiency on financial markets.
Chapter 2 characterizes the optimal capacity to be installed by an incumbent in the case of increasing demand. In this case, an over-capacity can have a double effect: to avoid or at least to delay entry, and to induce a lower capacity installed by the entrant. We show that there is a trade-off between these objectives.
Chapitre 3 presents a strategic use of debt. We assume that after entry, the incumbent and the entrant can negotiate a market exit for the entrant. By being highly leveraged, the entrant can credibly commit to trigger a price war in case of negotiation failure (by the limited liability effect), thus increasing the surplus obtained in the negotiation.
Chapter 4 introduces capacity constraints in a multi-firm, multi-plant and multi-market linear Cournot model. We prove existence and uniqueness of the equilibrium and characterize it.
| Item Type: | PhD Thesis (PhD) |
|---|---|
| Thesis Supervisor: | Tanguy, Hervé |
| Date: | October 2006 |
| Board of examiners: | Chemla, Gilles and Gromb, Denis and Ponssard, Jean-Pierre |
| Ecole Doctorale: | ED 447 ECOLE DOCTORALE DE L'ECOLE POLYTECHNIQUE |
| Discipline: | Département d'Economie |
| Collection (Fonds): | EP/X |
| Institution: | EP/X |
| Department: | Economie |
| Subjects: | 9. Sciences of Economy, Management and Society |
| Uncontrolled Keywords: | Capacity, Financial structure, Entry, Barrier, Bertrand-Edgeworth, Capacité de production, Structure financière, Entrée, Judo-economics, Barrière, Bertrand-Edgeworth |
Table of content
Chapitre 1: Surcapacité de production, collusion et signal
Chapitre 2: Choix de capacité en demande croissante
Chapitre 3: Jeu d'entrée et structure financière, une utilisation stratégique de la dette
Chapitre 4: Équilibre de Cournot sous contraintes de capacité
| ID Code: | 2039 |
|---|---|
| Deposited By: | Laurence Vidament |
| Deposited On: | 17 January 2007 |
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