How entry threat affect incumbent firm's political behaviors and prefernce?
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Entry threat affects incumbent firms' political behaviors and preferences. When faced with the threat of entry, lower-leverage incumbents tend to cut prices more aggressively than higher-leverage incumbents . Incumbent firms also respond to the threat of talent loss by reallocating rewards among their own workers, leading to greater wage inequality . The market positions and interdependencies of incumbent firms across submarkets also influence their response to entry threats. Full-service incumbents tend to expand capacity while low-cost incumbents do not respond significantly . Multinational corporations (MNCs) respond to competition threats by either taking preemptive actions or upgrading productivity, depending on their own existing activity and production network within the region . In the presence of entry threat, the incumbent firm-union pair may face a conflict between rent sharing and transmitting cost information, leading to different entry deterring contracts .
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