Industry Structure and Pricing Over the Business Cycle

Yossi Spiegel, Konrad Stahl

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review


We consider the interaction between an incumbent firm and a potential entrant, and examine how this interaction is affected by demand fluctuations. Our model gives rise to procyclical entry, prices, and price-cost margins, although the average price in the market can be countercyclical if the entrant is a first mover, and capacity utilization can be either pro- or countercyclical if the incumbent is a first mover. Moreover, our results show that entry deterrence by the incumbent firm can either amplify or dampen the effect of demand fluctuations on prices, price-cost margins, and capacity utilization.
Original languageEnglish
Title of host publicationThe Analysis of Competition Policy and Sectoral Regulation
EditorsMartin Peitz, Yossi Spiegel
PublisherWorld Scientific
Number of pages26
ISBN (Electronic)978-981-4616-37-9
ISBN (Print)978-981-4616-35-5
StatePublished - 2014

Publication series

NameWorld Scientific-Now Publishers Series in Business


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