Reputation, Disclosure, and the Scope of Entry

Rubik Khachatryan and Georgy Lukyanov

Papers from arXiv.org

Abstract: We study how shared response resources affect reputation, entry, and the value of disclosure. A later entrant chooses whether to enter zero, one, or two markets after observing a record of an incumbent's response to an earlier rival. The incumbent's response cost is private information. Shared costs make broader entry weaken the incumbent's investment in each market. More frequent publication induces additional imitation by the less capable type, reducing the informativeness of a response and expanding entry conditional on that record. Our main result compares shared and separable response costs while preserving all early and single-market payoffs. On an open set of primitives with uniform setup costs, full publication maximizes total surplus within the specified policy class when publication costs are low; under separable costs, no publication is optimal. A public capability audit is dominated in both economies. The reversal reflects productive reputational investment and the allocation of later entry, although expected entry scope is unchanged across policies within each technology.

Date: 2025-10, Revised 2026-10
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind and nep-mic
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