We analyze imperfect competition in dynamic environments where firms use rivalrous but
non-excludable industry-specific capital that is provided exogenously. Capital depreciation
depends on utilization, so firms influence the evolution of the capital equipment through
more or less intensive supply in the final-goods market. Strategic incentives stem from,(i) a
dynamic externality, arising due to the non-excludability of the capital stock, leading firms to
compete for its use (rivalry), and,(ii) a market externality, leading to the classic Cournot-type …