Entry and exit

We turn the zero-profit condition that is typically used to determine the number of firms into a game of entry/exit. We assume that identical firms compete in Cournot fashion, and when market conditions change, the equilibrium number of firms is determined in an entry/exit game. Focusing on symmetric equilibrium, the game may take several periods, and we determine the expected waiting time to reach the new equilibrium, as well as the economic value created during the adjustment period. The model is highly parametrised to allow for numerical results.