Sustainable positive profit multiple-price strategies in contestable markets

One of the most important features of contestable market is the incumbent's inability to react to entry. While in the traditional literature, this prevents the incumbent from earning positive profits, in multiple price setting it allows him to make a binding commitment to maintain his strategy even if entry occurs. It is shown that as a result of this pre-commitment, any natural monopolist can find a multiple price strategy that yields positive profit, and prevents entry.