Seminari Theory-Experimental

Ramon Faulí

Universidad de Alicante


seminar – 14:30


We assume that we have k firms that compete in a market by choosing the number of (costless) independent divisions they create. They choose them sequentially. We obtain that the total number of divisions that are created grows exponentially with the number of firms. Then we study a model of costly entry. We obtain that private and social incentives are more aligned than in the corresponding models without divisionalization: the competitive effect of divisionalization attenuates the incentive for excessive entry.

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