Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If You Use a Screen Reader

This content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.

Advertising and Entry Deterrence: An Exploratory Model

Richard Schmalensee
Journal of Political Economy
Vol. 91, No. 4 (Aug., 1983), pp. 636-653
Stable URL: http://www.jstor.org/stable/1831071
Page Count: 18
  • Read Online (Free)
  • Download ($14.00)
  • Subscribe ($19.50)
  • Cite this Item
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Advertising and Entry Deterrence: An Exploratory Model
Preview not available

Abstract

In this model, the effects of advertising are infinitely durable, fixed (and sunk) costs give rise to economies of scale, post-entry behavior is noncooperative, and pre-entry expectations are rational. Despite the obvious resemblance to work on the use of investment in production capacity to deter entry, here the incumbent monopolist never finds it optimal to advertise more if entry is possible than if it is not. This result and other features of this model indicate the dangers of analyzing advertising with analogies to other sorts of investments. The results make clear the need for more theoretical work on advertising and entry deterrence.

Page Thumbnails

  • Thumbnail: Page 
636
    636
  • Thumbnail: Page 
637
    637
  • Thumbnail: Page 
638
    638
  • Thumbnail: Page 
639
    639
  • Thumbnail: Page 
640
    640
  • Thumbnail: Page 
641
    641
  • Thumbnail: Page 
642
    642
  • Thumbnail: Page 
643
    643
  • Thumbnail: Page 
644
    644
  • Thumbnail: Page 
645
    645
  • Thumbnail: Page 
646
    646
  • Thumbnail: Page 
647
    647
  • Thumbnail: Page 
648
    648
  • Thumbnail: Page 
649
    649
  • Thumbnail: Page 
650
    650
  • Thumbnail: Page 
651
    651
  • Thumbnail: Page 
652
    652
  • Thumbnail: Page 
653
    653