Advertisement

Review of Economic Design

, Volume 15, Issue 2, pp 163–175 | Cite as

Lender learning and entry under general demand uncertainty

  • Neelam Jain
  • Leonard J. Mirman
Original Paper

Abstract

In this paper, we examine the effect of potential entry on learning by a lender when the demand shock has a general distribution. We show that under this type of noise, entry does not lead to any changes in the equilibrium expected signals and therefore, there is no effect on learning by the lender, unlike the case when noise is uniformly distributed. The result holds even when contracts are not observable.

Keywords

Entry Information Learning Contracts 

JEL Classification

D4 D8 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Aghion P, Espinosa M, Jullien B (1993) Dynamic duopoly with learning through market experimentation. Econ Theory 3: 517–539CrossRefGoogle Scholar
  2. Belleflamme P, Bloch F (2001) Price and quantity experimentation: a synthesis. Int J Ind Organ 19: 1475–1626CrossRefGoogle Scholar
  3. Dimitrova M, Schlee EE (2003) Monopoly, competition and information acquisition. Int J Ind Organ 21: 1623–1642CrossRefGoogle Scholar
  4. Jain N (2009a) Lender learning under sure entry, Working PaperGoogle Scholar
  5. Jain N (2009b) Lender learning and entry under demand uncertainty. Econ Bull 29(1): 100–107Google Scholar
  6. Jain N, Jeitschko TD, Mirman LJ (JJMa) (2002) Strategic experimentation in financial intermediation with threat of entry. Ann Oper Res 114(1–4): 203–227CrossRefGoogle Scholar
  7. Jain N, Jeitschko TD, Mirman LJ (JJMb) (2005) Entry-deterrence under financial intermediation with private information and hidden contracts. Rev Econ Des 9(3): 203–225Google Scholar
  8. Jeitschko TD, Mirman LJ (2002) Information and experimentation in short-term contracting. Econ Theory 19(2): 311–331CrossRefGoogle Scholar
  9. Jeitschko TD, Mirman LJ, Salgueiro E (2002) The simple analytics of information and experimentation in dynamic agency. Econ Theory 19(3): 549–570CrossRefGoogle Scholar
  10. Milgrom P, Roberts R (1981) Limit pricing under incomplete information. Econometrica 50: 443–460CrossRefGoogle Scholar
  11. Mirman LJ, Samuelson L, Urbano U (1993) Monopoly experimentation. Int Econ Rev 34: 549–564CrossRefGoogle Scholar

Copyright information

© Springer-Verlag 2011

Authors and Affiliations

  1. 1.Department of EconomicsCity University LondonLondonUK
  2. 2.Department of EconomicsUniversity of VirginiaCharlottesvilleUSA

Personalised recommendations