Market entry and roll-out with product differentiation

Tzavara, D, Levine, P and Rickman, N Market entry and roll-out with product differentiation .

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Abstract

This paper examines a general problem exemplified by post-auction (third generation---`3G') mobile telecommunications markets. When entering these (or any other) markets, firms must often decide on the degree of coverage (`roll-out') they wish to achieve. Prior investment must be sunk in order to achieve the desired (or mandated) coverage level. We study the private and social incentives of a would-be entrant into a market with horizontal product differentiation when choosing its level of roll-out. The endogenous extent of entry influences downstream retail prices; Bertrand or local monopoly pricing or a mixed strategy equilibrium may emerge. Importantly, entry may involve too much or too little roll-out from a social perspective, thus suggesting that regulatory intervention may be appropriate to achieve desired levels of competition in such settings.

Item Type:	Other
Divisions :	Surrey research (other units)
Authors :	Name Email ORCID Tzavara, D Levine, P p.levine@surrey.ac.uk Rickman, N
Depositing User :	Symplectic Elements
Date Deposited :	16 May 2017 15:14
Last Modified :	23 Jan 2020 10:26
URI:	http://epubs.surrey.ac.uk/id/eprint/818186

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