Anti-limit pricing
Extending Milgrom and Roberts (1982), we analyze an infinite horizon entry model where an incumbent may use its current price to signal its strength, in order to deter entry. In contrast with conventional limit pricing, we show that due to the importance of entrants' types on the post-entry duo...
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| Veröffentlicht in: | Hitotsubashi journal of economics 2010-12, Vol.51 (2), p.1-22 |
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| container_title | Hitotsubashi journal of economics |
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| creator | Jun, Byoung Heon Park, In-uck |
| description | Extending Milgrom and Roberts (1982), we analyze an infinite horizon entry model where an incumbent may use its current price to signal its strength, in order to deter entry. In contrast with conventional limit pricing, we show that due to the importance of entrants' types on the post-entry duopoly/oligopoly profits, the incumbent may want to signal its weakness to invite the entry of weaker firms. We also provide necessary and sufficient conditions for this phenomenon to arise in equilibrium, in the benchmark cases that no second entry is profitable. [PUBLICATION ABSTRACT] |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0018-280X |
| ispartof | Hitotsubashi journal of economics, 2010-12, Vol.51 (2), p.1-22 |
| issn | 0018-280X |
| language | eng |
| recordid | cdi_proquest_miscellaneous_861586284 |
| source | Jstor Complete Legacy; Open Access Titles of Japan; Elektronische Zeitschriftenbibliothek - Frei zugängliche E-Journals; EBSCOhost Business Source Complete |
| subjects | Duopoly Economic theory Equilibrium Market entry Marketing Oligopoly Price models Price theory Profit Signalling |
| title | Anti-limit pricing |
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