A BERTRAND MODEL OF PRICING AND ENTRY

We analyze an oligopolistic pricing and entry model in which there is a sunk cost of entry and in which firms' outputs are homogeneous. Firm s' pure strategies consist of a binary entry decision, and conditional on entry a uniform or non-linear price schedule. There does not exist a pure strategy Nash equilibrium in this model, so we analyze the sym metric mixed strategy equilibrium. The main result is that if there ex ists a positive sunk cost of entry, then an increase in the number of potential competitors puts more probability weight on higher prices. T his result is counter to the usual intuition that underlies current an titrust policy.