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Equilibrium uniqueness in entry games with private information

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  • José‐Antonio Espín‐Sánchez
  • Álvaro Parra
  • Yuzhou Wang

Abstract

We study equilibria in static entry games with single‐dimensional private information. Our framework embeds many models commonly used in applied work, allowing for firm heterogeneity and selective entry. We introduce the notion of strength, which summarizes a firm's ability to endure competition. In environments of applied interest, an equilibrium in which entry strategies are ordered according to the firms' strengths always exists. We call this equilibrium herculean. We derive simple and testable sufficient conditions guaranteeing equilibrium uniqueness and, consequently, a unique counterfactual prediction.

Suggested Citation

  • José‐Antonio Espín‐Sánchez & Álvaro Parra & Yuzhou Wang, 2023. "Equilibrium uniqueness in entry games with private information," RAND Journal of Economics, RAND Corporation, vol. 54(3), pages 512-540, September.
  • Handle: RePEc:bla:randje:v:54:y:2023:i:3:p:512-540
    DOI: 10.1111/1756-2171.12449
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    2. Rodrigo Carril & Andres Gonzalez-Lira & Michael S. Walker, 2022. "Competition under incomplete contracts and the design of procurement policies," Economics Working Papers 1824, Department of Economics and Business, Universitat Pompeu Fabra.

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