ABSTRACT
What exactly is meant by 'strategic behaviour'? What are necessary preconditions to make strategic moves possible and which different strategic options are available to incumbents? What is the possible welfare consequences of strategic behaviour directly related to this; what role should antitrust policy play with respect to such strategic moves? The chapter provides some basic answers to these essential questions. It assesses the foundations of strategic behaviour, which is followed by a simple analysis of the interrelation between strategic behaviour and entry. The chapter focuses on some main features of the relationship between strategic behaviour, welfare and antitrust policy. The basic idea behind a strategic move is that when making an optimal choice now, an incumbent must try to anticipate how his rivals will respond in the future. The incumbent's expectation is largely based on his perception of the rivals' payoffs and their perception of his payoffs.
