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.

Marseguerra, G., Cortelezzi, F., Dominioni, A., Investment timing decisions in a stochastic duopoly model, <<CHAOS, SOLITONS AND FRACTALS>>, 2006; (29): 611-625 [http://hdl.handle.net/10807/84671]

Investment timing decisions in a stochastic duopoly model

Marseguerra, Giovanni
Primo
;
Cortelezzi, Flavia
Secondo
;
2006

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.
Inglese
Marseguerra, G., Cortelezzi, F., Dominioni, A., Investment timing decisions in a stochastic duopoly model, <<CHAOS, SOLITONS AND FRACTALS>>, 2006; (29): 611-625 [http://hdl.handle.net/10807/84671]
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10807/84671
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 6
  • ???jsp.display-item.citation.isi??? 5
social impact