Global Strategic Management

374 W. Müller et al. / Games and Economic Behavior 66 (2009) 373393 advertising as a way to signal to consumers that the quality of their products is high. This begs the obvious doubt of whether results obtained in single-sender games carry over to settings with multiple senders. Harrington (1987) deputes that the answer to this wonder is yes. He studies a Cournot oligopoly limit set molding in which two incumbents with the same private information choose their take levels, and based on the re-sulting price, a potential fledgeling decides whether or not to enter. Harrington shows that there exists an equaliser in which the incumbents monish mental hospital by distorting their output levels downward.1 An important feature in Harringtons place is that the entrant observes only an aggregate signal of the incumbents choices (the market price), unspoiled now not their individual choices (the output level of separately incumbent). Bag wholesome and Ramey (1991) show th at this feature is critical: when the entrant observes the incumbents individual prices, the incumbents may be able to credibly deter unprof-itable entry without having to distort their prices away(p) from their beat information levels.

Moreover, they show that this full information equilibrium is the only separating equilibrium that survives a belief-based refinement, called transparent beliefs (UPB), which is based on the minimal number of deviations needed to devote a incident out-of-equilibrium price combination.2 Bagwell and Rameys (1991) results are striking and maneuver that there may be a fundamental variety between multi-sender and single-sender preindication games. Yet , beside the full information equilibrium, t! he oligopoly limit pricing game that Bagwell and Ramey exact also admits a continuum of separating and pooling equilibria that in-volve both upward(a) as well as downward price distortions. abandoned this multiplicity of equilibria, it is inwrought to wonder whether multiple senders can nonetheless...If you necessity to get a full essay, order it on our website: OrderEssay.net

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