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The Role of Limit Pricing in Sequential Entry Models

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  • Jeffrey Church
  • Roger Ware

Abstract

In this paper we establish a complete characterization of the strategic interaction of firms in sequential entry models. The limit price plays an important coordinating role in non-cooperative sequential entry models. We show that for many firms in a large range of sequential entry equilibria, the limit price is effectively parametric, so that firms make investment decisions in a quasi-competitive manner. Entry deterrence is only pursued by firms at the beginning of the sequence if it is profitable; otherwise it is delegated to the last firms to enter.

Suggested Citation

  • Jeffrey Church & Roger Ware, 1991. "The Role of Limit Pricing in Sequential Entry Models," Working Paper 836, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:836
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    File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_836.pdf
    File Function: First version 1991
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