Investment Decisions, Choice Value and Preemption when Demand is Uncertain

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ID Serval
serval:BIB_48A6D8BEBACA
Type
Non publié: un document ayant un auteur et un titre, mais non publié.
Collection
Publications
Titre
Investment Decisions, Choice Value and Preemption when Demand is Uncertain
Auteur⸱e⸱s
Bobtcheff Catherine
Date de publication
2007
Notes
Working paper
Résumé
We study the investment decision problem of a duopoly with price competition on a market of finite size driven by stochastic taste shocks. Each player has the choice between two technologies: a large unit and a small one. We prove that different equilibria may exist depending on the parameters' values: simultaneous investment equilibrium in the small unit or two mixed strategy equilibria, one in which each firm invests in the large unit with a strictly positive intensity and another one in which each firm invests with a strictly positive intensity in the small unit and in the large unit. The inaction regions where both technologies provide expected net payoffs that are too similar do not survive the introduction of preemption. Moreover, we prove that for some values of the demand, the preemption equilibrium is more efficient than the joint adoption equilibrium.
Mots-clé
K3
Création de la notice
19/11/2007 11:25
Dernière modification de la notice
20/08/2019 14:55
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