Industry structure with sequential technology choice (Q1112709)

Noncooperative entry deterrence arises in a market where firms enter sequentially and irreversibly choose a technology. In the case of delegated entry deterrence, the earliest firms enter with a normal technology, and pass on entry deterrence responsibilities to subsequent entrants. In the case of partial entry deterrence, the earliest firms choose an inferior technology that allows some, but not full, entry of later firms with a normal technology. In both cases, entry is deterred in that the equilibrium number of firms is smaller than would prevail if all firms were to choose a normal technology.