Strategic Multi-Market Investment and Market Integration

19 Pages Posted: 9 Mar 2007

See all articles by Mattias Ganslandt

Mattias Ganslandt

Centre for European Law and Economics; Research Institute of Industrial Economics; University of Colorado at Boulder - Department of Economics

Date Written: March 6, 2007

Abstract

This paper presents a model of multi-market entry deterrence with or without market commitments. Sufficient conditions for entry deterrence in the multi-market game are derived. It is shown that to deter entry in the multi-market game, the first-mover installs strictly more production capacity than the capacity needed to deter entry, if it is possible to assign parts of the capacity to specific markets. Market integration for production capacity through harmonization of standards, unbundling of tradable goods and untradable services or cross-border mergers and acquisitions may, consequently, have a pro-competitive effect.

Keywords: entry deterrence, multi-market competition, market integration

JEL Classification: F12, F15, L12

Suggested Citation

Ganslandt, Mattias, Strategic Multi-Market Investment and Market Integration (March 6, 2007). Available at SSRN: https://ssrn.com/abstract=968693 or http://dx.doi.org/10.2139/ssrn.968693

Mattias Ganslandt (Contact Author)

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