Competitive reaction to entry is an important issue in the marketing and economics areas. The monopolistic incumbent of a market often faces competitive entry if the market is profitable. This is a common issue that often occurs in the market transition from monopoly to competition. The entrant not only enters the market, but also wants to signal to tell consumers his quality level. The incumbent's reaction is also a signal to the consumers. Thus, how should the incumbent do? The paper "Response to Competitive Entry: A Rationale for Delayed Defensive Reaction" which is written by Ajay Kalra, Surendra Rajiv and Kannan Srinivasan (1998) and published in Marketing Science provides a completed and clear explanation of this issue. They claim that the incumbent would delay the defensive reaction to the competitive entry under information asymmetry. But it is still incorrect. Hence, we want to provide a revision to support that delayed defensive reaction is really a rational response to competitive entry, and explain this issue correctly and logically. We analyze the strategic interactions of the incumbent and the entrants which were omitted previously. Finally, we would obtain the conclusion that is also supporting this point of view¡G delayed defensive reaction is really a rational response to competitive. And it is really a Nash equilibrium, no firms would deviate.

Techn. Universiẗat, Diss.--Berlin, 2006.