FIRM SCALE AND THE ENDOGENOUS TIMING OF ENTRY - A CHOICE BETWEEN COMMITMENT AND FLEXIBILITY

This payer presents a model oi stochastic oligopoly with demand uncert ainty where firms endogenously choose entry timing. We examine two ext reme types of market structure and show that the equilibrium correspon dence that connects them is continous. With two identically sized firm s, there are symmetric. Cournot type equilibria where the probability of early entry declines with greater uncertainty, and for low uncertai nty two asymmetric equilibria. With one large firm with a continuum of nonatomic firms. there is a unique Stackelberg equilibrium We conclud e that the behavior of a dominant firm with a finite fringe can be app roximated by Stackelberg equilibrium. (C) 1996 Academic Press, Inc.