Entry, Product Line Expansion, and Predation

@inproceedings{Denicol2007EntryPL,
  title={Entry, Product Line Expansion, and Predation},
  author={Vincenzo Denicol{\`o} and Michele Polo and Piercarlo Zanchettin},
  year={2007}
}
In the Tourist-Caronte case in Italy, the incumbent, Tourist-Caronte, reacted to entry by entrant Diano by starting to supply a “damaged good” in the sense theorized by Deneckere and McAfee in 1996. We argue that in principle this strategy can be predatory, but it can also be an innocent response to entry. Specifically, the strategy of damaging the good leads to fiercer competition in the low segment of the market, which reduces the rents that the incumbent earns in the high segment, but may… CONTINUE READING

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