Perpetual signalling with imperfectly correlated costs

Article Abstract:

An industrial organization model wherein a firm intentionally limits its first-period profit as a signalling strategy to prevent knowledge of its private information is presented. Private information refer to factors which significantly determine a firm's profits such as cost. This signalling strategy, however, will not be used in following periods. Firms are able to enhance this strategy by making diverse variations of private information divulged through time periods. It was suggested that firms are continually motivated to use this strategy because it is easy to accomplish and achieves its objectives.

Models, Economics, Information theory, Equilibrium (Economics), Information theory in economics

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Signalling strength: limit pricing and predatory pricing

Article Abstract:

The use of pricing strategies as a means to indicate a firm's strength relative to competitors was studied as a dynamic signalling game. The pricing strategies studied were limit pricing and predatory pricing. It was concluded that when an incumbent firm considered itself vulnerable compared to newcomers, price-limit strategies were resorted to, while predatory pricing was used when the incumbent considered itself to be stronger. In cases where a firm's relative strength cannot be determined, a mixture of limit and predatory pricing may be used.

Management, Pricing, Prices

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Underinvestment and incompetence as responses to radical innovation: evidence from the photolithographic alignment equipment industry

Article Abstract:

An analysis industry reaction to radical technological innovations is theory. Neoclassical theory depicts the entry of other firms with more incentive to innovate to replace original firms.Organizational theory argues that original firms become victims of complacency as they fall in the face of radical innovations. It is shown that a combinationof both effects is possible given factors of underinvestment and incompetence.

Technological innovations

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