Milgrom and Roberts analyze limit pricing under incomplete information, where an established firm may set prices below monopoly levels to deter entry. In complete information scenarios, limit pricing is ineffective because entrants can accurately infer the firm's costs. However, with incomplete information, the pre-entry price can signal the firm's costs, leading to limit pricing in equilibrium. The probability of entry may be lower, the same, or even higher than in complete information scenarios. The paper presents two examples with linear demand and constant costs. In the first example, the established firm and entrant have two possible cost levels. The entrant infers the established firm's costs from the pre-entry price, leading to either pooling or separating equilibria. In pooling equilibria, the entrant cannot infer the firm's costs, while in separating equilibria, the entrant can accurately infer the firm's costs. Limit pricing may result in less, the same, or more entry than in complete information scenarios. In the second example, the model is extended to a continuum of cost levels. The analysis shows that limit pricing can emerge in equilibrium, with the entrant's conjectures about the established firm's behavior influencing entry decisions. The entrant's expectations of profitability are not consistently biased by the established firm's actions, leading to varied entry probabilities. The paper concludes that limit pricing can occur in equilibrium under incomplete information, and the probability of entry may not necessarily be lower than in complete information scenarios. The analysis highlights the importance of rational expectations and the role of conjectures in shaping entry decisions. The findings suggest that limit pricing may not always deter entry and can have complex effects on market outcomes.Milgrom and Roberts analyze limit pricing under incomplete information, where an established firm may set prices below monopoly levels to deter entry. In complete information scenarios, limit pricing is ineffective because entrants can accurately infer the firm's costs. However, with incomplete information, the pre-entry price can signal the firm's costs, leading to limit pricing in equilibrium. The probability of entry may be lower, the same, or even higher than in complete information scenarios. The paper presents two examples with linear demand and constant costs. In the first example, the established firm and entrant have two possible cost levels. The entrant infers the established firm's costs from the pre-entry price, leading to either pooling or separating equilibria. In pooling equilibria, the entrant cannot infer the firm's costs, while in separating equilibria, the entrant can accurately infer the firm's costs. Limit pricing may result in less, the same, or more entry than in complete information scenarios. In the second example, the model is extended to a continuum of cost levels. The analysis shows that limit pricing can emerge in equilibrium, with the entrant's conjectures about the established firm's behavior influencing entry decisions. The entrant's expectations of profitability are not consistently biased by the established firm's actions, leading to varied entry probabilities. The paper concludes that limit pricing can occur in equilibrium under incomplete information, and the probability of entry may not necessarily be lower than in complete information scenarios. The analysis highlights the importance of rational expectations and the role of conjectures in shaping entry decisions. The findings suggest that limit pricing may not always deter entry and can have complex effects on market outcomes.