Anti-Limit Pricing

Byoung Jun () and In-Uck Park

Hitotsubashi Journal of Economics, 2010, vol. 51, issue 2, 1-22

Abstract: 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 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.

Keywords: Dynamic Signaling; Limit Pricing; Entry Deterrence (search for similar items in EconPapers)
JEL-codes: D42 D43 D82 L11 (search for similar items in EconPapers)
Date: 2010
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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/18774/HJeco0510200010.pdf

Related works:
Working Paper: Anti-Limit Pricing (2005)
Working Paper: Anti-Limit Pricing (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:51:y:2010:i:2:p:1-22

DOI: 10.15057/18774

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