Entry Games under Private Information

Jos'-Antonio Esp'n-S'nchez () and Alvaro Parra
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Jos'-Antonio Esp'n-S'nchez: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/jose-antonio-espin-sanchez
Authors registered in the RePEc Author Service: José-Antonio Espín-Sánchez

No 2126, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We study market entry decisions when firms have private information about their profitability. We generalize current models by allowing general forms of market competition and heterogeneous firms that self-select when entering the market. Post-entry profits depend on market structure, and on the identities and the private information of the entering firms. We introduce a notion of the firm's strength and show that an equilibrium where players' strategies are ranked by strength, or herculean equilibrium, always exists. Moreover, when profits are elastic enough with respect to the firm's private information, the herculean equilibrium is the unique equilibrium of the game.

Keywords: Entry; Oligopolistic markets; Private Information (search for similar items in EconPapers)
Pages: 50 pages
Date: 2018-04
New Economics Papers: this item is included in nep-bec, nep-com, nep-gth, nep-hpe and nep-mic
Note: Includes supplemental material
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Citations: View citations in EconPapers (1)

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