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Title: |
Entry Deterrence and Entry Inducement in an
Industry with Complementary Products |
| Author: |
Kim, Jeong-Yoo |
| Author
Affiliation: |
Dongguk U |
| Source: |
International Economic Journal, Winter 2003, v. 17, no. 4, pp. 107-123 |
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Publication Date: |
Winter 2003 |
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Abstract: |
This paper
discusses asses the possibility of signal jamming between multiple
informed incumbents with conflicting interests and examines the
implication of the possibility in the limit pricing literature. I find
fully separating equilibria where the incumbent competing against the
entrant does not use limit pricing in an optimal response to "inductive
pricing" by another incumbent desiring entry i.e., charging a lower
price than the static equilibrium price to induce entry. Thus, contrary
to Milgrom and Roborts, the consequences of asymmetric information for
welfare are ambiguous even in fully separating equilibria. |
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