Investment timing decisions in a stochastic duopoly model

Giovanni Marseguerra, Flavia Cortelezzi, Armando Dominioni

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review

6 Citazioni (Scopus)

Abstract

We investigate the role of strategic considerations on the optimal timing of investment when firms compete for a new market (e.g., the provision of an innovative product) under demand uncertainty. Within a continuous time model of stochastic oligopoly, we show that strategic considerations are likely to be of limited impact when the new product is radically innovative whilst the fear of a rival's entry may deeply affect firms' decisions whenever innovation is to some extent limited. The welfare analysis shows surprisingly that the desirability of the different market structures considered does not depend on the fixed entry cost.
Lingua originaleEnglish
pagine (da-a)611-625
Numero di pagine15
RivistaChaos, Solitons and Fractals
Stato di pubblicazionePubblicato - 2006

Keywords

  • investments
  • real options

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