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Information Manipulation and Entry Deterrence

Author

Listed:
  • Hilde Patron

    (University of West Georgia)

  • Kenneth Roskelley

    (Mississippi State University)

Abstract

In this paper we study the production decisions of a firm facing uncertain demand and the threat of entry from a rival. The incumbent, who has the ability to generate information about demand by appropriately choosing quantity, can use information to make better informed choices and to manipulate the decisions of the rival firm. We find that, although the monopolist may increase or even decrease quantity to discourage entry, it always manipulates information in a way that lowers the ex ante probability of entry.

Suggested Citation

  • Hilde Patron & Kenneth Roskelley, 2008. "Information Manipulation and Entry Deterrence," Journal of Economic Insight, Missouri Valley Economic Association, vol. 34(1), pages 77-93.
  • Handle: RePEc:mve:journl:v:34:y:2008:i:1:p:77-93
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    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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