dc.contributor.author |
Brandts, Jordi |
dc.contributor.author |
Cabrales, Antonio |
dc.contributor.author |
Charness, Gary |
dc.contributor.other |
Universitat Pompeu Fabra. Departament d'Economia i Empresa |
dc.date.accessioned |
2017-07-26T12:07:53Z |
dc.date.available |
2017-07-26T12:07:53Z |
dc.date.issued |
2003-07-01 |
dc.identifier |
https://econ-papers.upf.edu/ca/paper.php?id=703 |
dc.identifier.citation |
Economic Theory, forthcoming |
dc.identifier.uri |
http://hdl.handle.net/10230/999 |
dc.description.abstract |
While the theoretical industrial organization literature has long argued
that excess capacity can be used to deter entry into markets, there is
little empirical evidence that incumbent firms effectively behave in this
way. Bagwell and Ramey (1996) propose a game with a specific sequence of
moves and partially-recoverable capacity costs in which forward induction
provides a theoretical rationalization for firm behavior in the field. We
conduct an experiment with a game inspired by their work. In our data the
incumbent tends to keep the market, in contrast to what the forward
induction argument of Bagwell and Ramey would suggest. The results indicate
that players perceive that the first mover has an advantage without having
to pre-commit capacity. In our game, evolution and learning do not drive
out this perception. We back these claims with data analysis, a
theoretical framework for dynamics, and simulation results. |
dc.format.mimetype |
application/pdf |
dc.language.iso |
eng |
dc.relation.ispartofseries |
Economics and Business Working Papers Series; 703 |
dc.rights |
L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons |
dc.rights.uri |
http://creativecommons.org/licenses/by-nc-nd/3.0/es/ |
dc.title |
Forward induction and the excess capacity puzzle: An experimental investigation |
dc.type |
info:eu-repo/semantics/workingPaper |
dc.date.modified |
2017-07-23T02:07:55Z |
dc.subject.keyword |
entry |
dc.subject.keyword |
excess |
dc.subject.keyword |
capacity |
dc.subject.keyword |
forward induction |
dc.subject.keyword |
equilibrium selection |
dc.subject.keyword |
first-mover advantage |
dc.subject.keyword |
leex |
dc.subject.keyword |
Behavioral and Experimental Economics |
dc.subject.keyword |
Microeconomics |
dc.rights.accessRights |
info:eu-repo/semantics/openAccess |