Abstract
We study equilibria in static entry games with single-dimensional private information. Our framework embeds many models commonly used in applied work, allowing for 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 ordered according to the firms' strengths always exists. We call this equilibrium herculean. We derive simple and testable sufficient conditions guaranteeing equilibrium uniqueness and, consequently, a unique counterfactual prediction.
Citation
Espín-Sánchez, José-Antonio, Álvaro Parra, and Yuzhou Wang. 2023. "Equilibrium uniqueness in entry games with private information." The RAND Journal of Economics 54, no. 3: 512-540. https://doi.org/10.1111/1756-2171.12449.