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Matsushima, N. (2006). Industry Profits and Free Entry in Input Markets. Economics Letters, 93, 329-336.
https://doi.org/10.1016/j.econlet.2006.05.023

has been cited by the following article:

• TITLE: Profit-Raising Entry with Heterogeneous Incumbent Firms

  AUTHORS: Chiu-Hui Li, Jen-Yao Lee

  KEYWORDS: Heterogeneous Firms, Profit-Raising Entry, Stackelberg Competition

  JOURNAL NAME: Theoretical Economics Letters, Vol.16 No.2, April 24, 2026

  ABSTRACT: This paper studies profit-raising entry with heterogeneous incumbent firms. In a homogeneous-product Stackelberg model with two incumbent leaders and a follower entrant, entry always increases total output. However, profit effects depend on incumbent cost asymmetry. Because outputs are strategic substitutes, the inefficient incumbent contracts output more after entry, relaxing competition and allowing the efficient incumbent to gain. With intermediate entrant efficiency, entry raises the efficient incumbent’s profit, acting as a selection mechanism.