January 24, 2001
Eric Rasmusen notes, erasmuse@indiana.edu
Http://Php.Indiana.edu/~erasmuse
Drew Fudenberg & Jean Tirole,"The Fat-Cat Effect, The Puppy-Dog Ploy,
and the Lean and Hungry Look,'' American Economic Review, Papers and
Proceedings, 74: 361-366 (May 1984).
p. 379. The original had a dot above Rm, a typo. It is fixed here.
The bottom paragraph says, "all firms will choose to cover the
remaining market in the second period". It is crucial but unstated that
the incumbent has already locked up the first K_1 customers-- that they
cannot be reached by the second period advertising.
p. 381. Equation (7) is derived from equation (1) by taking the
derivative of Pi^2 with respect to K_1.
p. 383. In Table 1, the original article had a typo: A instead of D
in the bottom row, Downward, in Cases III and II. It is fixed here.
The Upward-sloping reaction curves indicate strategic complements, and
the Downward, strategic substitutes in the terminology of Bulow,
Geanakoplos, and Klemperer (1983), later published as
Bulow, Jeremy, John Geanakoplos \& Paul Klemperer (1985) ``Multimarket
Oligopoly: Strategic Substitutes and Complements,'' {\it Journal of
Political Economy}, 93: 488-511 (June 1985).