Competitors are welcome: why incumbents might embrace entrants?

In this article we show that the price and the profit of an incumbent firm may increase after a new firm enters its market. Our analysis suggests that a well-established firm after competition emerges on its market might benefit from excluding some consumers from the low-end segment and concentrate only on its loyal consumers.

Strategic segmentation: when two monopolies are better than one

In this article we show that the price and the profit of an incumbent firm may increase after a new firm enters its market. Our analysis suggests that a well-established firm after competition emerges on its market might benefit from excluding some consumers from the low- end segment and concentrate only on its loyal consumers. We also find that strategic de-marketing can increase social welfare.