Description:
In an infinitely repeated market entry game, an entrant does not know demand and actions are unobservedbut signaled via pro ts. The incumbent may choose a predatory price (a signal jam) when demand is high toyield negative pro ts to the entrant and induce exit. Efficiency is only possible for impatient players. I testthe theory with three experimental treatments differing by the discount factor. There is more signal jammingand less efficiency as the discount factor increases consistent with the theory, although entrants mistakenlystay out of the market even when the incumbent does not signal jam