Technological leadership and persistence of monopoly under endogenous entry : static versus dynamic analysis

Abstract

We build a dynamic oligopoly model with endogenous entry in which a particular firm (leader) invests in an innovation process, facing the subsequent entry of other firms (followers). We identify conditions that make it optimal for the leader in the initial oligopoly situation to undertake pre-emptive R&D investment (strategic predation) eventually resulting in the elimination of all followers.

Keywords

• dynamic oligopoly
• endogenous entry
• persistence of monopoly