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

Moreover, they show that this full information equilibrium is the only separating equilibrium that survives a belief-based refinement, called colour-blind beliefs (UPB), which is based on the minimal number of deviations needed to refund a incident out-of-equilibrium price combination.2 Bagwell and Rameys (1991) results are striking and foreshadow that there may be a fundamental struggle 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 up as well as downward price distortions. presumption this multiplicity of equilibria, it is inwrought to wonder whether multiple senders can nonetheless...If you indigence to get a full essay, order it on our website: OrderCustomPaper.com

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