CFDP 2126R

Equilibrium Uniqueness in Entry Games with Private Information

Author(s): 

Publication Date: April 2018

Revision Date: May 2021

Pages: 50

Abstract: 

We study equilibrium uniqueness in entry games with private information. Our framework embeds models commonly used in applied work, allowing rich forms of firm heterogeneity and selective entry. We introduce the notion of strength, which summarizes a firm’s ability to endure competition. In environments of applied interest, an equilibrium in which entry strategies are ranked according to strength, called herculean equilibrium, always exists. Thus, when the entry game has a unique equilibrium, it must be herculean. We derive simple sufficient conditions guaranteeing equilibrium uniqueness and, consequently, robust counterfactual analyses.

Supplemental material

Supplement pages: 5

Keywords: Entry, Oligopolistic markets, Private Information

JEL Classification Codes: D21, D43, L11, L13

JEL Classification Codes: D21D43L11L13

See CFDP Version(s): CFDP 2126