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Full-Text Articles in Operations and Supply Chain Management
The Impact Of The Potential Entry Of Copycats: Entry Conditions, Consumer Welfare, And Social Welfare, Sarah Y. Gao, Wei Shi Lim, Christopher Tang
The Impact Of The Potential Entry Of Copycats: Entry Conditions, Consumer Welfare, And Social Welfare, Sarah Y. Gao, Wei Shi Lim, Christopher Tang
Research Collection Lee Kong Chian School Of Business
This article examines the implications of the potential entry of a copycat who produces and sells a copycat (i.e., imitation) product that competes with the incumbent product. By analyzing a two-period dynamic noncooperative game between these two firms, we identify conditions under which the copycat can gain successful market entry. More importantly, we find that the potential entry of a copycat creates (implicit) pressure for the incumbent to lower its selling price; hence, it improves consumer welfare. Finally, we identify conditions under which the potential entry of a copycat can increase social welfare (i.e., consumer welfare and the profit of …