Document Type

Discussion Paper

Publication Date

4-1-2018

CFDP Number

2126R

CFDP Revision Date

5-5-2021

CFDP Pages

50

Journal of Economic Literature (JEL) Code(s)

D21, D43, L11, L13

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.

d2126-rs.pdf (397 kB)

Included in

Economics Commons

Share

COinS