Author(s)

Yasunori Fujita

Economic Department, Keio University, Tokyo, Japan.

By reformulating the Cournot model by making use of the optimal stopping theory, we reconsider the excess entry theorem for a stochastic market. It is revealed that: 1) free entry in a stochastic oligopolistic market is socially excessive, owing not only to the presence of scale economies but also to the value of waiting; 2) welfare maximizing number of the entrants is larger if the market is more uncertain.

Excess Entry Theorem, Cournot Competition, Optimal Stopping Theory, Geometric Brownian Motion, Value of Waiting

Fujita, Y. (2016) Value of Waiting and Excess Entry Theorem. Theoretical Economics Letters, 6, 208-213. doi: 10.4236/tel.2016.62023.