Price dynamics in a two-period reputation model
This paper looks at the time-path of prices in a two-period modified version of the reputation model of Milgrom and Roberts(10) in which a non-standard price signalling stage game is substituted for the entry-deterrence game those authors work with. It shows that prices may rise or fall from one period to the next. Also, it shows that “bonding’’ is not possible in this environment.
Volume (Year): 16 (2001)
Issue (Month): 2 ()
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- Milgrom, Paul & Roberts, John, 1986.
"Price and Advertising Signals of Product Quality,"
Journal of Political Economy,
University of Chicago Press, vol. 94(4), pages 796-821, August.
- David Kreps & Paul Milgrom & John Roberts & Bob Wilson, 2010.
"Rational Cooperation in the Finitely Repeated Prisoners' Dilemma,"
Levine's Working Paper Archive
239, David K. Levine.
- Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
- Banks, Jeffrey S. & Sobel, Joel., 1985.
"Equilibrium Selection in Signaling Games,"
565, California Institute of Technology, Division of the Humanities and Social Sciences.
- David Kreps & Robert Wilson, 1998.
Levine's Working Paper Archive
237, David K. Levine.
- Mark N. Hertzendorf, 1993. "I'm Not a High-Quality Firm -- But I Play One on TV," RAND Journal of Economics, The RAND Corporation, vol. 24(2), pages 236-247, Summer.
- Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-641, August.
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