Excess Liquidity against Predation
We consider precautionary liquidity holding as counter-strategy for the entrant to protect himself from predation. Threat of predation, even if avoided in equilibrium, affects the financial contract to raise precautionary liquidity and the equilibrium outcome in the product market competition. When the incumbent's strategy is unverifiable, the entrant with small start-up capital cannot raise large enough precautionary liquidity; consequently, he shrinks his business so as to avoid predation. Predation evolves in the model only as perturbation from equilibrium strategy. We provide the revelation principle for a sequential equilibrium to select a sensible outcome by imposing robustness to such perturbation.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
| Length: | |
| Date of creation: | Jun 2012 |
| Handle: | RePEc:tem:wpaper:1201 |
| Contact details of provider: | Postal: Ritter Annex 877, Philadelphia, PA 19122 Phone: 215.204.8880 Fax: 215.204.8173 Web page: http://www.cla.temple.edu/economics/ More information through EDIRC
|
References listed on IDEAS
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.:
- Argenton, C., 2010. "Predation Under Perfect Information," Discussion Paper 2010-26, Tilburg University, Center for Economic Research.
- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, July.
- Helmut Bester & Roland Strausz, "undated". "Imperfect Commitment and the Revelation Principle," Papers 004, Departmental Working Papers.
- Gerardi, Dino & Myerson, Roger B., 2007.
"Sequential equilibria in Bayesian games with communication,"
Games and Economic Behavior,
Elsevier, vol. 60(1), pages 104-134, July.
- Dino Gerardi & Roger B. Myerson, 2005. "Sequential Equilibria in Bayesian Games with Communication," Cowles Foundation Discussion Papers 1542, Cowles Foundation for Research in Economics, Yale University.
- Mendez-Naya L. & Garcia-Jurado, I. & Cesco, J. C., 1996. "Perfection of Nash equilibria in continous games," Mathematical Social Sciences, Elsevier, vol. 31(1), pages 53-53, February.
- Mendez-Naya, L. & Garcia-Jurado, I. & Cesco, J. C., 1995. "Perfection of Nash equilibria in continuous games," Mathematical Social Sciences, Elsevier, vol. 29(3), pages 225-237, June.
- Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, July.
- Martin J Osborne & Ariel Rubinstein, 2009. "A Course in Game Theory," Levine's Bibliography 814577000000000225, UCLA Department of Economics.
This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.
When requesting a correction, please mention this item's handle: RePEc:tem:wpaper:1201. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dimitrios Diamantaras)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.