An analysis of preemptive behavior in the titanium dioxide industry

Abstract Much of the recent theoretical work on oligopoly theory focuses on preemptive capital expansion. This paper continues this work by testing whether DuPont's behavior in the titanium dioxide industry was consistent with the capital commitment model between 1972 and 1977. This is different from previous empirical papers analyzing preemptive capital expansion because it focuses on strategic behavior in a specific industry and because the hypothesis tests in this paper are based on a formal model of firms' optimizing behavior. The results lend support to the conclusion that DuPont committed capital to preempt the smallest five firms in the industry between 1972 and 1977.