Information Manipulation and Entry Deterrence
AbstractIn this paper we study the production decisions of a firm facing uncertain demand and the threat of entry from a rival. The incumbent, who has the ability to generate information about demand by appropriately choosing quantity, can use information to make better informed choices and to manipulate the decisions of the rival firm. We find that, although the monopolist may increase or even decrease quantity to discourage entry, it always manipulates information in a way that lowers the ex ante probability of entry.
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Bibliographic InfoArticle provided by Missouri Valley Economic Association in its journal The Journal of Economics.
Volume (Year): 34 (2008)
Issue (Month): 1 ()
Find related papers by JEL classification:
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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