A note on reputation: More on the Chain-Store Paradox

This note considers the reputation phenomenon in the context of the Chain-Store Paradox. Two major aspects of the perfect information assumption are relaxed: potential entrants do not know the ordering in which they have to make their entry decisions and they do not have full knowledge of the past history of the market. It is shown that, without introducing private information or changing the nature of the conflict, there exist sequential equilibria of the game with imperfect information in which the monopolist is willing to build reputation. Journal of Economic Literature Classification Numbers: C72, D82, L13. (C) 1996 Academic Press, Inc.