Firm scale and the endogenous timing of entry: A choice between commitment and flexibility

This payer presents a model oi stochastic oligopoly with demand uncertainty where firms endogenously choose entry timing. We examine two extreme types of market structure and show that the equilibrium correspondence that connects them is continous. With two identically sized firms, there are symmetric. Cournot type equilibria where the probability of early entry declines with greater uncertainty, and for low uncertainty two asymmetric equilibria. With one large firm with a continuum of nonatomic firms. there is a unique Stackelberg equilibrium We conclude that the behavior of a dominant firm with a finite fringe can be approximated by Stackelberg equilibrium. (C) 1996 Academic Press, Inc.