Entry and Exit With Information Externalities
Stefano Comino ()
Industrial Organization from University Library of Munich, Germany
In the paper we analyze how the possibility of revealing information to a competitor alters the entry/investment behavior of a first entrant. We show that once it has entered the market, the firm might refrain from making further profitable investments in order to hide information from the competitor. Moreover, we show that before entering the market, the first entrant anticipates that there is a strategic advantage in choosing an initially small scale of entry: in this way it 'commits' itself to revealing the true state of the market with its subsequent decisions and this fact is beneficial since it induces the competitor to postpone entry into market.
Keywords: Entry; Information Externalities; Wait and See; First Entrant; Strategic Behavior (search for similar items in EconPapers)
JEL-codes: D82 D83 L11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ent, nep-ind, nep-mic and nep-tid
Note: Type of Document - pdf; pages: 25. An updated version of the paper is forthcoming in the Journal of Economic Behavior and Organization and it is available as 'article in press' in the homepage of the journal
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Journal Article: Entry and exit with information externalities (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpio:0510006
Access Statistics for this paper
More papers in Industrial Organization from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ().