Fight or flight? Market positions, submarket interdependencies, and strategic responses to entry threats

Research Summary This paper examines how incumbent firms' market positions and interdependencies across their submarkets influence their responses to entry threats. We adapt a model of capacity deterrence to show that because premium and low‐cost incumbents face different demand functions and operating costs, they experience different tradeoffs between ignoring, deterring, and accommodating threatened entry. In addition, the interdependencies...