STRATEGIC INVESTMENT AND TIMING OF ENTRY

We introduce competition over entry time into a sequential output choi ce model to show how profit differences will be dissipated. This resol ves a problem in the standard Stackelberg model that the order of move s is exogenously specified yet an earlier position in the order is usu ally preferred to a later one. If capacity costs are not too low, our solution applies even if firms cannot commit to sell their entire outp ut. Introducing positive capacity costs slightly modifies the static S tackelberg results since endogenous cost asymmetries arise. The framew ork therefore partially rehabilitates the Stackelberg model