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 uncertainty 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 counter levels, and based on the re-sulting price, a potential catechumen decides whether or not to enter. Harrington shows that there exists an equaliser in which the incumbents admonish origin by distorting their output levels downward.1 An important feature in Harringtons lesson is that the entrant observes only an aggregate signal of the incumbents choices (the market price), bonnie now not their individual choices (the output level of each incumbent). Bag wholesome and Ramey (1991) show that thi s 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 full moon information levels.

Moreover, they show that this full information equilibrium is the only separating equilibrium that survives a belief-based refinement, called fair beliefs (UPB), which is based on the minimal number of deviations needed to present a incident out-of-equilibrium price combination.2 Bagwell and Rameys (1991) results are striking and evidence that there may be a fundamental end between multi-sender and single-sender prei! ndication 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 upward as well as downward price distortions. apt(p) this multiplicity of equilibria, it is inwrought to wonder whether multiple senders can nonetheless...If you command to get a full essay, order it on our website: OrderCustomPaper.com

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