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The Output Competition Game between FDI Port Enterprises and Incumbent Port Enterprises

With the opening to the outside world, port market entry and exit become relatively free in China. In this context, there will be a game of market entry and anti-entry between foreign direct investment (FDI) port enterprises and incumbent ones. Cournot and Dixit Model were both used to study the output competition game between above two kinds of enterprises. Cournot equilibrium shows that FDI port enterprises' output falls as the its own marginal cost increases but increases as the competitors' marginal cost increases. In Dixit Model, by researching the reaction function based on the production scale, marginal cost and scale cost, the selection conditions of FDI port enterprises' market entry strategy were studied. Results show that enterprises entry strategy selection is relative to the limitation and equilibrium output.