IDEAS home Printed from https://ideas.repec.org/p/kud/kuieci/1997-12.html
   My bibliography  Save this paper

Capacity and Entry Deterrence under Asymmetric Information on Demand

Author

Listed:
  • Sougata Poddar

    (Institute of Economics, University of Copenhagen)

Abstract

I consider a two period model with an incumbent firm and a potential entrant each of whom produces a homogeneous good. There is a demand uncertainty and the information regarding the demand is asymmetric: the incumbent possesses private information concerning the state of demand while the entrant only knows the probability distribution. I show that under certain cost structure of the incumbent (which is common knowledge), using capaciy as a signalling device, the incumbent can reliably convey the information to the potential entrant regarding the state of demand; while in some other cost environment such a signalling has no effect. Outcomes are more desirable where signalling truly reveals and more importantly convince the entrant about the true state of demand compared to those where signalling does not reveal.

Suggested Citation

  • Sougata Poddar, 1997. "Capacity and Entry Deterrence under Asymmetric Information on Demand," CIE Discussion Papers 1997-12, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    • Handle: RePEc:kud:kuieci:1997-12
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    More about this item

    Keywords

    capacity; signalling; demand uncertainty;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kud:kuieci:1997-12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Hoffmann (email available below). General contact details of provider: https://edirc.repec.org/data/ciekudk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.