Information acquisition and entry
Before firms decide whether to enter a new market or not, they have the opportunity to buy information about several variables that might affect the profitability of this market. Our model differs from the existing literature on endogenous information acquisition in two respects: (1) there is uncertainty about more than one variable, and (2) information is acquired secretly. When the cost of acquiring information is small, entry decisions will be as if there was perfect information. Equilibria where each firm acquires only a small amount of information are more robust than the socially undesirable equilibria where all firms gather all information. Examples illustrate the importance of assumptions (1) and (2).
Year of publication: |
1996-02
|
---|---|
Authors: | Hurkens, Sjaak ; Vulkan, Nir |
Institutions: | Department of Economics and Business, Universitat Pompeu Fabra |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Endogenous information structures
Hurkens, Sjaak, (1999)
-
Free entry does not imply zero profits
Hurkens, Sjaak, (1997)
-
Interbank comptetition with costly screening
Freixas, Xavier, (2004)
- More ...