Return to the Spence-Dixit entry deterrence model of Chapter ... | Filo
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Signaling with entry accommodation This question will explore signaling when entry deterrence is impossible, so the signaling firm accommodates its rival's cntry. Assume deterrence is impossibic because the two firms do not pay a sunk cost to enter or remain in the market. The setup of the model will follow Example 15.4, so the calculations there will aid the solution of this problem. In particular, firm i 's demand is given by qi=ai-pi (pj)/(2) where ai is product i^' s attribute ( say, qua
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