Signalling rivalry and quality uncertainty in a duopoly
Bester, Helmut ;  Demuth, Juri ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleSignalling rivalry and quality uncertainty in a duopoly
AuthorBester, Helmut
AuthorDemuth, Juri
InstitutionUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages23 S.
Series Discussion paper / School of Business & Economics ; 2011/20 ; Economics
KeywordsQuality uncertainty; Signalling; Oligopoly
Classification (DDC)330 Economics
AbstractThis paper considers a market in which only the incumbent’s quality is publicly known.
The entrant’s quality is observed by the incumbent and some fraction of informed consumers.
This leads to price signalling rivalry between the duopolists, because the incumbent
gains and the entrant loses when observed prices make the uninformed consumers
more pessimistic about the entrant’s quality. When the uninformed consumers’ beliefs
satisfy the ‘intuitive criterion’ and the ‘unprejudiced belief refinement’, only a two–sided
separating equilibrium can exist and prices are identical to the full information outcome.
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FU DepartmentDepartment Business and Economics
Other affiliation(s)Institut für Wirtschaftstheorie
Year of publication2011
Type of documentBook
Terms of use/Rights Nutzungsbedingungen
Created at2011-12-14 : 02:46:20
Last changed2015-01-22 : 04:40:45
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000012616