Abstract
A home firm signals her privately known cost through expanding (either by a direct investment or by export) in the domestic country of a foreign firm, which is given the possibility of counter-entry. The perfect Bayesian equilibria of the game show that it cannot be identified a simple monotonic relationship between some technology and demand parameters on the one side and the international expansion modes on the other side. Moreover, it is shown that in a separating equilibrium consumer surplus is always no lower than what is obtained with complete information, whereas a pooling equilibrium give rise to ambiguous net welfare effects relative to those with complete information.
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Nastasi, A., Reverberi, P. (2001). A Signalling Game in International Oligopolistic Competition. In: Fleischmann, B., Lasch, R., Derigs, U., Domschke, W., Rieder, U. (eds) Operations Research Proceedings. Operations Research Proceedings, vol 2000. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-56656-1_23
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DOI: https://doi.org/10.1007/978-3-642-56656-1_23
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