The dynamic annihilation of a rational competitive fringe by a low-cost dominant firm (Q1106082)
From MaRDI portal
 | This is the item page for this Wikibase entity, intended for internal use and editing purposes. Please use this page instead for the normal view: The dynamic annihilation of a rational competitive fringe by a low-cost dominant firm |
scientific article; zbMATH DE number 4060956
| Language | Label | Description | Also known as |
|---|---|---|---|
| English | The dynamic annihilation of a rational competitive fringe by a low-cost dominant firm |
scientific article; zbMATH DE number 4060956 |
Statements
The dynamic annihilation of a rational competitive fringe by a low-cost dominant firm (English)
0 references
1988
0 references
A low-cost dominant firm will drive all competitive fringe firms out of the market if all firms have rational expectations; however, the dominant firm will not predate (price below marginal cost). Since a dominant firm will not drive out fringe firms if they have myopic expectations, it may be in the dominant firm's best interests to inform the fringe. The effects of governmental intervention on the optimal path and welfare are presented.
0 references
dominant firm
0 references
rational expectations
0 references
governmental intervention
0 references
0 references
