Template-Type: ReDIF-Paper 1.0
Title: A Dynamic Model of Predation
Author-Name: Patrick Rey
Author-Email: patrick.rey@tse-fr.eu
Author-Name: Yossi Spiegel
Author-Email: spiegel@post.tau.ac.il
Author-Name: Konrad Stahl
Author-Email: konrad.stahl@uni-mannheim.de

Classification-JEL: D43, L41

Keywords: predation, accommodation, entry, legal rules, Markov perfect equilibrium

Abstract: We study the feasibility and profitability of predtion in a dynamic environment, using a
parsimonious infinite-horizon, complete information setting in which an incumbent repeatedly
faces potential entry. When a rival enters, the incumbent chooses whether to accommodate or
predate it; the entrant then decides whether to stay or exit. We show that there always exists a
Markov perfect equilibrium, which can be of three types: accommodation, monopolization, and
recurrent predation. We then analyze and compare the welfare effects of different antitrust
policies, accounting for the possibility that recurrent predtion may be welfare improving.

Note: 
Length: 43
Creation-Date: 2024-04
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp529
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2024_529