Entry Deterrence and Entry Inducement in an Industry with Complementary Products
AbstractThis paper discusses the possibility of signal jamming between multiple informed incumbents with conflicting interests and examines the implication of the possibility in the limit pricing literature. I find fully separating equilibria where the incumbent competing against the entrant does not use limit pricing in an optimal response to “inductive pricing” by another incumbent desiring entry i.e., charging a lower price than the static equilibrium price to induce entry. Thus, contrary to Milgrom and Roborts, the consequences of asymmetric information for welfare are ambiguous even in fully separating equilibria. [L11]
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal International Economic Journal.
Volume (Year): 17 (2003)
Issue (Month): 4 ()
Contact details of provider:
Web page: http://www.tandfonline.com/RIEJ20
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Milgrom, Paul & Roberts, John, 1982.
"Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis,"
Econometric Society, vol. 50(2), pages 443-59, March.
- Paul Milgrom & John Roberts, 1998. "Limit Pricing and Entry Under Incomplete Information: An Equilibrium Analysis," Levine's Working Paper Archive 245, David K. Levine.
- Michael H. Riordan, 1985. "Imperfect Information and Dynamic Conjectural Variations," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 41-50, Spring.
- Christian Schultz, 1997.
"Limit Pricing when Incumbents have Conflicting Interests,"
CIE Discussion Papers
1997-17, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- Schultz, Christian, 1999. "Limit pricing when incumbents have conflicting interests," International Journal of Industrial Organization, Elsevier, vol. 17(6), pages 801-825, August.
- Joseph E. Harrington Jr., 1987. "Oligopolistic Entry Deterrence under Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 211-231, Summer.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.