Yes, I largely agree with the logic underlying your analysis (though not your conclusion), and did not mean my post to say that they were trying to lure competi

Yes, I largely agree with the logic underlying your analysis (though not your conclusion), and did not mean my post to say that they were trying to lure competitors into the market, but more to say that they would (though I understand your reading of it probably makes more sense than my writing). If you believe that the eventual average cost would prevent a new entrant, the new entrant would have to know (or believe that there was a high probability of) the entrenched producer would cut prices upon the second producer's entry. I do not find this to be particularly likely. In any case, the first producer would be betting on the likelyhood of the second producer's estimation of the likelyhood of a downward price change by the first. This strains credulity (, in my view).[1] I think that if anything, your argument proves too much, as no company would even enter a competitive market if what you describe is the case. [1] https://en.wikipedia.org/wiki/Romanoff_and_Juliet_(play) https://en.wikipedia.org/wiki/Romanoff_and_Juliet_(play)