Working paper

A Dynamic Model of Predation

Patrick Rey, Yossi Spiegel, and Konrad Stahl


Growing concern about the market power of big tech giants has led to renewed interest in predatory behavior. We study the feasibility and profitability of predation in a dynamic environment, using a parsimonious infinite-horizon, complete information setting in which an incumbent repeatedly faces potential entry. When a rival enters, the incumbent chooses whether to accommodate or predate it; the entrant then decides whether to stay or exit. We show that there always exists a Markov perfect equilibrium, which can be of three types: accommodation, monopolization, and recurrent predation. We then analyze and compare the welfare effects of different antitrust policies.


predation; accommodation; entry; legal rules; Markov perfect equilibrium;

JEL codes

  • D43: Oligopoly and Other Forms of Market Imperfection
  • L41: Monopolization • Horizontal Anticompetitive Practices


Patrick Rey, Yossi Spiegel, and Konrad Stahl, A Dynamic Model of Predation, TSE Working Paper, n. 22-1375, October 2022.

See also

Published in

TSE Working Paper, n. 22-1375, October 2022