advertising as a way to signal to consumers that the quality of their products is high. This begs the obvious hesitancy of whether results obtained in single-sender games carry over to settings with multiple senders. Harrington (1987) deputes that the answer to this oppugn is yes. He studies a Cournot oligopoly limit pricing molding in which two incumbents with the same private information choose their takings levels, and based on the re-sulting price, a potential entrant decides whether or not to enter. Harrington shows that there exists an equaliser in which the incumbents deter creation by distorting their output levels downward.1 An important feature in Harringtons model is that the entrant observes only an aggregate signal of the incumbents choices (the market price), just now not their individual choices (the output level of each incumbent). Bag wholesome and Ramey (1991) show that this feature is critical: when the entrant observes the incumbents individual prices, the incumbents may be able to credibly deter unprof-itable entry without having to distort their prices away(p) from their full information levels.
Moreover, they show that this full information equilibrium is the only separating equilibrium that survives a belief-based refinement, called unprejudiced beliefs (UPB), which is based on the minimal number of deviations needed to generate a incident out-of-equilibrium price combination.2
Bagwell and Rameys (1991) results are striking and indicate that there may be a fundamental difference between multi-sender and single-sender preindication games. Yet, beside the full information equilibrium, the oligopoly limit pricing game that Bagwell and Ramey exact also admits a continuum of separating and pooling equilibria that in-volve both upward as well as downward price distortions. Given this multiplicity of equilibria, it is inwrought to wonder whether multiple senders can nonetheless...If you want to get a full essay, order it on our website: Orderessay
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