The Role of Limit Pricing in Sequential Entry Models

Jeffrey Church and Roger Ware ()

No 836, Working Paper from Economics Department, Queen's University

Abstract: In this paper we establish a complete characterization of the strategic interaction of firms in sequential entry models. The limit price plays an important coordinating role in non-cooperative sequential entry models. We show that for many firms in a large range of sequential entry equilibria, the limit price is effectively parametric, so that firms make investment decisions in a quasi-competitive manner. Entry deterrence is only pursued by firms at the beginning of the sequence if it is profitable; otherwise it is delegated to the last firms to enter.

Pages: 45 pages
Date: 1991-10
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http://qed.econ.queensu.ca/working_papers/papers/qed_wp_836.pdf First version 1991 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:836

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