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A "Signal-Jamming" Theory of Predation

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Author Info

  • Drew Fudenberg
  • Jean Tirole

Abstract

We propose a new theory of predation based on "signal-jamming." In our model the predator's characteristics are common knowledge, while the entrant is uncertain of his own future profitability. The entrant uses his current profit to decide whether to remain in the market, and the predator preys to "jam" or interfere with this inference problem. Thus, our model differs from those based on "reputation effects," in which the predator preys to signal information about himself.

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Bibliographic Info

Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 17 (1986)
Issue (Month): 3 (Autumn)
Pages: 366-376

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Handle: RePEc:rje:randje:v:17:y:1986:i:autumn:p:366-376

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Cited by:
  1. David Mayer-Foulkes, 2011. "Vulnerable Markets," DEGIT Conference Papers c016_040, DEGIT, Dynamics, Economic Growth, and International Trade.
  2. Bengt Holmstrom, 1999. "Managerial Incentive Problems: A Dynamic Perspective," NBER Working Papers 6875, National Bureau of Economic Research, Inc.
  3. Thomas P. Lyon & John W. Maxwell, 2004. "Astroturf: Interest Group Lobbying and Corporate Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 561-597, December.
  4. Scharfstein, David. & Stein, Jeremy C., 1988. "Herd behavior and investment," Working papers WP 2062-88., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  5. Fiona Scott Morton, 1996. "Entry and Predation: British Shipping Cartels 1879-1929," NBER Working Papers 5663, National Bureau of Economic Research, Inc.
  6. Fosu, Samuel, 2013. "Capital structure, product market competition and firm performance: Evidence from South Africa," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(2), pages 140-151.
  7. Enrique Schroth & Dezsö Szalay, 2005. "Cash breeds Success: The Role of Financing Constraints in Patent Races," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 05.11, Université de Lausanne, Faculté des HEC, DEEP.
  8. Valentiny, Pál, 2004. "Árprés és felfaló árazás. Közgazdasági elmélet, bírói, szabályozói gyakorlat
    [Price squeezing and predatory pricing. Economic theory and judicial and regulatory practice]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 24-45.
  9. Scott Gehlbach, 2003. "Taxability, Elections, and Government Support of Business Activity," Working Papers w0030, Center for Economic and Financial Research (CEFIR).
  10. Scott Gehlbach, 2003. "Taxability and Low-Productivity Traps," Working Papers w0029, Center for Economic and Financial Research (CEFIR).
  11. Jullien, Bruno & Pavan, Alessandro, 2013. "Platform Pricing under Dispersed Information," TSE Working Papers 13-429, Toulouse School of Economics (TSE).
  12. Leach, J. Chris & Moyen, Nathalie & Yang, Jing, 2013. "On the strategic use of debt and capacity in rapidly expanding markets," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 332-344.
  13. Ruiz-Aliseda, Francisco, 2009. "Misinformative advertising," IESE Research Papers D/809, IESE Business School.
  14. Ana Espinola-Arredondo & Esther Gal-Or & Felix Munoz-Garcia, 2009. "When Should a Firm Expand Its Business? The Signaling Implications of Business Expansion," Working Papers 2008-16, School of Economic Sciences, Washington State University.
  15. Chan, Kwok Ho & Lu, Zhou & Fung, Ka Wai Terence, 2013. "Predation Due to Bargaining Power Difference in Financial Contracting," MPRA Paper 52873, University Library of Munich, Germany.
  16. Basil Al-Najjar & Rong Ding, 2014. "Product Market Competition and Corporate Governance Disclosure: Evidence from the UK," Economic Issues Journal Articles, Economic Issues, vol. 19(1), pages 73-94, March.
  17. Ron Borkovsky & Ulrich Doraszelski & Yaroslav Kryukov, 2012. "A dynamic quality ladder model with entry and exit: Exploring the equilibrium correspondence using the homotopy method," Quantitative Marketing and Economics, Springer, vol. 10(2), pages 197-229, June.

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