Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis Export

@article{citeulike:1761886, abstract = {Limit pricing involves charging prices below the monopoly price to make new entry appear unattractive. If the entrant is a rational decision maker with complete information, pre-entry prices will not influence its entry decision, so the established firm has no incentive to practice limit pricing. However, if the established firm has private, payoff relevant information (e.g., about costs), then prices can signal that information, so limit pricing can arise in equilibrium. The probability that entry actually occurs in such an equilibrium, however, can be lower, the same, or even higher than in a regime of complete information (where no limit pricing would occur).}, author = {Milgrom, Paul and Roberts, John}, citeulike-article-id = {1761886}, citeulike-linkout-0 = {http://www.jstor.org/stable/1912637}, journal = {Econometrica}, keywords = {450-1}, number = {2}, pages = {443--459}, posted-at = {2007-10-12 22:01:21}, priority = {2}, title = {Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis}, url = {http://www.jstor.org/stable/1912637}, volume = {50}, year = {1982} }

TY - JOUR ID - citeulike:1761886 L3 - citeulike-article-id:1761886 N2 - Limit pricing involves charging prices below the monopoly price to make new entry appear unattractive. If the entrant is a rational decision maker with complete information, pre-entry prices will not influence its entry decision, so the established firm has no incentive to practice limit pricing. However, if the established firm has private, payoff relevant information (e.g., about costs), then prices can signal that information, so limit pricing can arise in equilibrium. The probability that entry actually occurs in such an equilibrium, however, can be lower, the same, or even higher than in a regime of complete information (where no limit pricing would occur). IS - 2 JF - Econometrica EP - 459 TI - Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis VL - 50 SP - 443 KW - 450-1 AU - Milgrom, Paul AU - Roberts, John PY - 1982/// UR - http://www.jstor.org/stable/1912637 ER -