Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/330255 
Year of Publication: 
2025
Series/Report no.: 
ECONtribute Discussion Paper No. 374
Publisher: 
University of Bonn and University of Cologne, Reinhard Selten Institute (RSI), Bonn and Cologne
Abstract: 
We revisit the classic chain-store paradox by introducing a novel element: the arrival of exogenous, public signals about the incumbent's private type over time. As the horizon lengthens, two opposing forces come into play. On one hand, standard reputational incentives grow stronger; on the other, the increasing availability of information makes it more difficult to sustain a reputation. We show that full deterrence can still emerge as the horizon grows arbitrarily long, though not always, and we provide a complete characterization of the conditions under which it arises.
Subjects: 
Entry deterrence
reputation
chain-store paradox
JEL: 
C72
C73
Document Type: 
Working Paper

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