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 unbelief of whether results obtained in single-sender games carry over to settings with multiple senders. Harrington (1987) deputes that the answer to this query is yes. He studies a Cournot oligopoly limit price molding in which two incumbents with the same private information choose their effect levels, and based on the re-sulting price, a potential starter decides whether or not to enter. Harrington shows that there exists an equaliser in which the incumbents monish groundwork by distorting their output levels downward.1 An important feature in Harringtons fabric is that the entrant observes only an aggregate signal of the incumbents choices (the market price), exactly now not their individual choices (the output level of distributively 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 encompassing information levels.

Moreover, they show that this full information equilibrium is the only separating equilibrium that survives a belief-based refinement, called truthful beliefs (UPB), which is based on the minimal number of deviations needed to move over a incident out-of-equilibrium price combination.2 Bagwell and Rameys (1991) results are striking and presage that there may be a fun damental remainder between multi-sender and! single-sender preindication games. Yet, beside the full information equilibrium, the oligopoly limit pricing game that Bagwell and Ramey exact also admits a continuum of separating and pooling equilibria that in-volve both upwardly as well as downward price distortions. given(p) this multiplicity of equilibria, it is inwrought to wonder whether multiple senders can nonetheless...If you sine qua non to get a full essay, order it on our website: OrderCustomPaper.com

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