서강대학교

초록/요약

This paper analyzes the possibilities of entry-deterrence in Cournot and Bertrand duopoly model with differentiated goods. If the established firm can commit his quantity or price, it is harder for the established firm to deter entry under Cournot competition than Bertrand competition provided that the degree of product differentiation close to 1, which means the goods are almost homogeneous. Similarly, if the established firm can invest a pre-entry capacity, which gives the established firm a commitment power, it is harder for the established firm to deter entry under Cournot competition than Bertrand competition unless the degree of product differentiation is close to 0, which means the goods are nearly independent. Hence, the possibilities of entry-deterrence in Cournot and Bertrand model depends on the degree of product differentiation. This results from the difference between the established firm''s profits in Cournot and Bertrand model. While the established firm''s profit is positive in Cournot model, it is close to 0 in Bertrand model, especially with homogeneous goods, therefore the potential entrant has little incentive to enter the market under Bertrand competition.