Doraszelski, Ulrich; Satterthwaite, Mark - Society for Economic Dynamics - SED - 2004
In this paper we show that existence of a Markov perfect equilibrium (MPE) in the Ericson & Pakes (1995) model of dynamic competition in an oligopolistic industry with investment, entry, and exit requires admissibility of mixed entry/exit strategies, contrary to their assertion. This is...