Price or monopoly price assumption cost of potential

This preview shows page 2 out of 2 pages.

price” or monopoly price -Assumption: Cost of potential entrant is uncorrelated with the cost of incumbent - “Limit pricing” can signal as incumbent’s toughness - If costs are positive correlated, the incumbent will have incentive to signal its cost is high, then discourage entry Bagwell, Ramsey (1988) -Extend the research - Indicate that incumbent should combine “limit price” with second signal: advertising to effect on demand Roberts (1986) Fudenberg and Jean Tirole (1986) “Predatory pricing” of incumbent firm Similar to spirit of above conclusions LeBlanc (1992) - Adding slightly to the dynamic structure - Both limit pricing and predatory pricing can emerge as equilibrium signals Mailath (1989) - Research about effects of each firms inferences about its opponent’s costs -Endogenous timing of decisions -Results from information being signaled leads to higher first-period price - Model is illustrative rather than conclusive, however, issues of timing are important=> impose for further research.
Image of page 2

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern