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A Consumer as an Entrant in the Norwegian Cement Market
The Journal of Industrial Economics
Vol. 41, No. 2 (Jun., 1993), pp. 191-204
Published by: Wiley
Stable URL: http://www.jstor.org/stable/2950436
Page Count: 14
You can always find the topics here!Topics: Cements, Incumbents, Consumer prices, Consumer economics, Input prices, Import prices, Prices, Financial investments, Market prices, Price cuts
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The paper sheds light on the strategy of two entrants in the Norwegian cement market, where both started importing cement. One entrant was an initial consumer of the incumbent's product, and thus imported for own consumption. We demonstrate that this type of entrant will undertake a sunk investment to have access to a second supplier in cases where other types of entrants are deterred. Both types of entrants must accept a high import price if the incumbent can purchase the exclusive right to import from foreign suppliers. We find that the two observed entry attempts are consistent with the model's predictions.
The Journal of Industrial Economics © 1993 Wiley