Introduction

This chapter provides some sense of how the field has evolved and how theory and empirical work are intertwined. It dominants firm can adopt certain strategies to help to maintain its market power in the face of potential entry. However, it sometimes makes sense for a dominant firm to sacrifice market share to its competitors. Among the relevant factors in the dominant firm's decision is its discount rate, the current period profits compared to future profits, and the dominant firm's concerns about attracting antitrust attention by behaving aggressively toward its competitors. The relevant factors in the dominant firm's decision are its discount rate, the current period profits compared to future profits, and the dominant firm's concerns about attracting antitrust attention by behaving aggressively toward its competitors. Firms lost significant market share to competitors as a result of a high-price policy with little concern for the entry or expansion of competitors, consistent with the predictions of the model.