Agency Problem and Entry Equilibrium

대리인 문제와 진입균형

The paper analyzes how an agency problem in one industry affects the nature of equilibrium in another related industry facing potential entry. It is shown that, under certain situation, the incumbent allows for entry and charges a higher price than that without the agency problem. And the incumbent can reap more profits as a result of entry. The socially optimal price may be higher than, equal to or lower than the price the incumbent charges.