期刊
MANAGEMENT SCIENCE
卷 64, 期 5, 页码 2325-2344出版社
INFORMS
DOI: 10.1287/mnsc.2017.2730
关键词
firm objectives; organization and behavior; market structure; firm strategy; market performance; industries; leisure; strategy
Using new data on entry plans into the American casino industry, I find that incumbent firms invest in physical capacity when threatened with a nearby entry plan, and these strategic investments deter eventual entry. Consistent with an entry-deterrence motive, incumbents respond to the threat of entry when entry is uncertain, but not when entry is assured. The average capacity expansion of 2,300 square feet is associated with a 6.8-percentage-point greater likelihood that the entry plan fails. These findings show that investments in deterrence are viable, especially when new entrants face other significant barriers to entry.
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