Limiting Price Strategy Research For Oligopoly Enterpirses

Price competition is the key for oligopoly enterprise competition, as a businessstrategy behavior, limiting price strategy designed by the incumbent ’s current pricestrategy to influence the potential manufacturer‘s except for profit level after enter themarket , thus affect the potential manufacturer decide to into the market .The research for limiting price strategy has experienced three stages: the staticlimiting price, dynamic limiting price and limiting price under the incompleteinformation. Although the limiting price model under the incomplete information ismore close to the reality, but most of the existing studies were limited to the existenceof equilibrium , follow-up studies although further pointed out that the existence ofequilibrium is multiplex, but there is no further research for how to" refining" theequilibrium outcome . On the basis of Milgrom-Roberts model, this paper establisheda optimal output model for incumbent to meet the target of profit maximization in theproduction range , and put forward the general method for further" refining" theconclusion of Milgrom-Roberts model . Our research shows that:First, the strategy equilibrium of different cost type of incumbent under theconditions of incomplete information block potential competitors into the market canbe exist in a production range. Second, Due to the potential threat of entry, if theincumbent want to implement limiting price strategy successfully, the optimalproduction can be only equal to or greater than the monopoly output, while profits canbe only less than or equal to the monopoly profit. Third, The incumbent implementlimiting price strategy is not necessarily to cost for the reduce of profit, because nomatter how the cost types, when monopoly output in the equilibrium output interval ,the monopoly output not only can realize the monopoly profits, but also can preventthe potential enterprise; only when the monopoly output is less than the left point ofthe equilibrium output interval , if the incumbent want to prevent the potentialenterprise enter the market, the incumbent would need to product optimal yield thatmore than monopoly output. Fourth, limiting price strategy actually forms the onlystrategy equilibrium that the incumbent product optimal yield, while potentialcompetitors do not enter the market ;...