0000000000850899
AUTHOR
Yair Tauman
Entry and espionage with noisy signals
Abstract We analyze the effect of industrial espionage on entry deterrence. We consider a monopoly incumbent who may expand capacity to deter entry, and a potential entrant who owns an Intelligence System. The Intelligence System (IS) generates a noisy signal based on the incumbentʼs actions. The potential entrant uses this signal to decide whether or not to enter the market. The incumbent may signal-jam to manipulate the likelihood of the noisy signals and hence affect the entrantʼs decisions. If the precision of the IS is commonly known, the incumbent benefits from his rivalʼs espionage. Actually, he benefits more the higher is the precision of the IS while the spying entrant is worse off…
A Model of Multiproduct Price Competition
Abstract We provide a simple model of price competition in a multiproduct oligopoly market. The products are of general nature. We find that a pure strategy equilibrium exists and every equilibrium consumption maximizes the total social surplus. Consumers are characterized by a set function which determines their willingness to pay for every subset of products. If this function is convex, the set of equilibrium prices coincides with the core of a cooperative game generated by this set function and the firms extract total industry surplus. If it is concave, the only equilibrium price of a product is its marginal contribution to the consumer's total willingness to pay. Journal of Economic Lit…
Entry with two correlated signals : the case of industrial espionage and its positive competitive effects
Recent advances in information and communication technologies have increased the incentives for firms to acquire information about rivals. These advances may have major implications for market entry because they make it easier for potential entrants to gather valuable information about, for example, an incumbent’s cost structure. However, little theoretical research has actually analyzed this question. This paper advances the literature by extending a one-sided asymmetric information version of Milgrom and Roberts’ (1982) limit pricing model. Here, the entrant is allowed access to an intelligence system (IS) of a certain precision that generates a noisy signal on the incumbent’s cost struct…