Abstract
This article deals with the introduction of product innovation in a contestable market model. Investment contestability describes a benchmark case of competition by introducing sunk entry-deterring investment in a free entry framework. Aside from careful price setting, suppliers adopt investment in product quality in order to deter entry. Zero-profit pricing and increased quality point to a partial second-best outcome of market behaviour.
| Original language | English |
|---|---|
| Pages (from-to) | 181-196 |
| Number of pages | 16 |
| Journal | De Economist |
| Volume | 138 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 1 Jun 1990 |
