Abstract
This paper studies sequential entry decisions when two potential entrants have private information about market profitability. Under symmetric information, there can be inefficient entry only if there are negative payoff externalities (i.e. if entry decisions are substitutes), and hence, insufficient entry never takes place. Under asymmetric information, there are several distortions coming from payoff and information externalities in a non-separable way. In particular, insufficient entry is now a possibility both for strong positive and negative payoff externalities. However, entry subsidies can be justified only when entry decisions are weakly complementary.