Stackelberg Competition with endogenous Entry,Economic

I characterise endogenous market structures where leaders have a first-mover advantage and entry is endogenous. Leaders are always more aggressive than the followers, independently from strategic substitutability or complementarity. Under quantity competition, leaders produce more than any follower and I determine the conditions for entry-deterrence (high substitutability and non-increasing marginal costs). Under price competition, leaders set lower prices than the followers (the opposite than with an exogenous number of firms). In contests, leaders invest more than each follower. In all these cases a leadership improves the allocation of resources compared to the Nash equilibrium with endogenous entry. This article studies endogenous market structures where a firm has a first mover advantage in the sense of Stackelberg (1934) on the other firms and entry in the market is endogenous. The article characterises the equilibrium of these endo-genous market structures and provides welfare analysis for some of the applications. These market structures emerge in many sectors which are substantially competitive (a fringe of firms is ready to enter whenever there is a profitable opportunity) but where some incumbent firms have a competitive advantage over the followers (becaus