✦ LIBER ✦

Joint ventures for entry deterrence

✍ Scribed by Shaoping Zhao

Publisher: John Wiley and Sons
Year: 1999
Tongue: English
Weight: 95 KB
Volume: 20
Category: Article
ISSN: 0143-6570
DOI: 10.1002/(sici)1099-1468(199902)20:1<25::aid-mde915>3.0.co;2-4

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✦ Synopsis

The literature of joint ventures has not discussed whether joint ventures may be used to deter entry. This paper then addresses how joint ventures may be used strategically for this purpose. Under the assumptions of linear demand and linear cost, as well as Stackelberg -Cournot interactions between incumbents and their joint venture firms, it is found that the incumbents can deter entry by creating independent joint ventures. Furthermore, it is shown that the optimal number of the joint ventures for the deterrence and the optimal deterrence strategies are functions of the number of potential entrants.

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