CFDP Revision Date
Journal of Economic Literature (JEL) Code(s)
D21, D43, L11, L13
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.
Espín-Sánchez, José-Antonio; Parra, Álvaro; and Wang, Yuzhou, "Equilibrium Uniqueness in Entry Games with Private Information" (2018). Cowles Foundation Discussion Papers. 2617.