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Information Acquisition and Entry

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Author Info
Sjaak Hurkens
Nir Vulkan

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Abstract

Before firms decide whether to enter a new market or not, they have the opportunity to buy information about several variables that might affect the profitability of this market. Our model differs from the existing literature on endogenous information acquisition in two respects: (1) there is uncertainty about more than one variable, and (2) information is acquired secretly. When the cost of acquiring information is small, entry decisions will be as if there was perfect information. Equilibria where each firm acquires only a small amount of information are more robust than the socially undesirable equilibria where all firms gather all information. Examples illustrate the importance of assumptions (1) and (2).

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 155.

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Date of creation: Feb 1996
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Handle: RePEc:upf:upfgen:155

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Web page: http://www.econ.upf.edu/

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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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  24. Xavier Cuadras, 1994. "Perishable Medium of Exchange (Can Ice Cream be Money?)," Economics Working Papers 80, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  26. Giorgia Giovannetti & Albert Marcet & Ramon Marimon, 1993. "Growth, Capital Flows and Enforcement Constaints: The Case of Africa," Economics Working Papers 22, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  27. Mulligan, Casey B & Sala-i-Martin, Xavier, 1996. "Adoption of Financial Technologies: Implications for Money Demand and Monetary Policy," CEPR Discussion Papers 1358, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  28. Thierry Foucault, 1994. "Price Formation and Order Placement Strategies in a Dynamic Order Driven Market," Economics Working Papers 99, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  31. Fabio Canova, 1994. "Does Detrending Matter for the Determination of the Reference Cycle and the Selection of Turning Points?," Economics Working Papers 113, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 1995. [Downloadable!]
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  32. Raffaela Giordano, 1992. "A Model of Inflation and Reputation with Wage Bargaining," Economics Working Papers 72, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 1994. [Downloadable!]
  33. Walter Garcia Fontes & Massimo Motta, 1994. "Quality of Professional Services under Price Floors," Economics Working Papers 87, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  34. Xavier Calsamiglia & Alan Kirman, 1991. "A Unique Informationally Efficient and Decentralized Mechanism with Fair Outcomes," Economics Working Papers 7, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  35. Juan P. Nicolini, 1993. "More on the Time Inconsistency of Optimal Monetary Policy," Economics Working Papers 56, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  36. Nir Dagan, 1996. "Consistency and the Walrasian Allocations Correspondence," Economic theory and game theory 012, Nir Dagan. [Downloadable!]
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  37. Ramon Faulí & Massimo Motta, 1994. "Why do Owners Let their Managers Pay too much for their Acquisitions?," Economics Working Papers 94, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  39. Nir Dagan, 1995. "Consistent Solutions in Exchange Economies: A Characterization of the Price Mechanism," Economics Working Papers 141, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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Full references

Cited by:
(explanations, 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.)

  1. Elisabetta Iossa & Francesca Stroffolini, 2007. "Integration and Separation with Costly Demand Information," CSEF Working Papers 170, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
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  2. Sjaak Hurkens & Nir Vulkan, 1997. "Free Entry does not Imply Zero Profits," Economics Working Papers 268, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  3. Esther Hauk & Sjaak Hurkens, 1996. "Secret Information Acquisition in Cournot Markets," Economics Working Papers 233, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 1997. [Downloadable!]
  4. Elisabetta Iossa & Francesca Stroffolini, 2008. "Vertical Integration and Costly Demand Information in Regulated Network Industries," CEDI Discussion Paper Series 08-03, Centre for Economic Development and Institutions(CEDI), Brunel University. [Downloadable!]
  5. Sjaak Hurkens & Nir Vulkan, 1999. "Endogenous Information Structures," Economics Working Papers 386, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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