Entry into a network industry: consumers' expectations and firms' pricing policies

Entry into a network industry is modeled focusing on consumers’ expectations formation\r\nthrough higher order beliefs. Equilibrium expectations are endogenous and depend on prices,\r\nacting as a coordination device among consumers. The model is able to account for aggressive\r\npricing policies by the incumbent and by the entrant. Both exclusion and entry are possible outcomes\r\n(depending on parameter values). The threat of entry is beneficial to consumers, even when\r\nunsuccessful.