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Llanis Llanis
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6 years ago
How can a firm be made better off by limiting its options?
Textbook 
Microeconomics

Microeconomics


Edition: 6th
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6 years ago
By limiting its options, the firm commits to a certain strategy. The strategy is now viewed as credible by potential competitors. For example, an oversized plant commits the firm to a large level of output. Its threat to overproduce in the face of entry is now viewed as credible.
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