AbstractExtending Milgrom and Roberts (1982), we analyze an infinite horizon entry model where an incumbent may use its current price to signal its strength, in order to deter entry. In contrast with conventional limit pricing, we show the entry of weaker firms. We also provide necessary and sufficient conditions for this phenomenon to arise in equilibrium, in the benchmark cases that no second entry is profitable.
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Bibliographic InfoPaper provided by UCLA Department of Economics in its series Levine's Bibliography with number 172782000000000041.
Date of creation: 28 Mar 2005
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Web page: http://www.dklevine.com/
Other versions of this item:
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-04-09 (All new papers)
- NEP-COM-2005-04-09 (Industrial Competition)
- NEP-FIN-2005-04-09 (Finance)
- NEP-IND-2005-04-09 (Industrial Organization)
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.:
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- Byoung Heon Jun & In-Uck Park, 2005.
172782000000000041, UCLA Department of Economics.
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