This chapter examines a two-stage quantity-competition model with an
established firm and a potential entrant. Demand functions are divided into the
following four cases: ‘substitute goods and strategic complements’, ‘substitute goods
and strategic substitutes’, ‘complementary goods and strategic substitutes’ and
‘complementary goods and strategic complements’. All these cases are correlated with
two opposite strategic devices. This chapter discusses the entry-deterring behaviours
resulting from strategic commitments by the established firm in all four cases.
Keywords: Complementary goods, countermeasure, entry deterrence, lifetime
employment contract, monopolist, potential entrant, quantity-setting model,
stability condition, strategic complements, strategic substitutes, substitute goods,
wage-rise contract.
