Passive cross holding as a strategic entry deterrence. (English) Zbl 1364.91057
Summary: This paper builds a duopoly model to study the strategic effects of cross holding on entry deterrence. We show that, in equilibrium, the incumbent optimally chooses strictly positive cross holdings in each other to deter entry for the potential entrant.
MSC:
| 91B24 | Microeconomic theory (price theory and economic markets) |
| 91A20 | Multistage and repeated games |
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