A Sequential Signaling Model of the Sale of an Invention to an Oligopolist
Document Type
Article
Publication Date
5-13-2004
Publication Title
The B.E. Journal of Theoretical Economics: Topics
DOI
10.2202/1534-598X.1117
ISSN
1534-598X
Abstract
I consider the problem of an independent inventor attempting to sell a cost-reducing innovation in an oligopoly setting. There are N potential buyers and the inventor possesses private information regarding the value of the invention. A revealing equilibrium is characterized in which the inventor's demand signals the value of the invention to each potential buyer. I find that both the inventor's demand and his continuation value increase as the number of firms left in the sequence of potential buyers increases. I also find that a firm's probability of rejecting the inventor's demand is higher the sooner the firm is approached in the sequence.
Recommended Citation
King, John T..
2004.
"A Sequential Signaling Model of the Sale of an Invention to an Oligopolist."
The B.E. Journal of Theoretical Economics: Topics, 4 (1): De Gruyter.
doi: 10.2202/1534-598X.1117
https://digitalcommons.georgiasouthern.edu/economics-facpubs/21
