Time-to-build investment and uncertainty in oligopoly
|Title:||Time-to-build investment and uncertainty in oligopoly||Authors:||Dewit, Gerda
|Permanent link:||http://hdl.handle.net/10197/1304||Date:||Feb-2002||Abstract:||This paper examines how time to build alters strategic investment behaviour under oligopoly. Facing demand uncertainty, firms decide whether to invest early or wait until uncertainty has been resolved. A game that captures time-to-build investment is contrasted with another one in which investment is quick in place. We show that a time lag between when and how much to invest reduces the incentive to delay. When investment requires time to complete, early investment occurs more to avoid becoming a follower than to become a strategic investment leader. The opposite is true with quick-in-place investment. A brief welfare analysis is provided.||Funding Details:||ASEAN-EC Management Centre (AEMC)||Type of material:||Working Paper||Publisher:||University College Dublin. School of Economics||Series/Report no.:||UCD Centre for Economic Research Working Paper Series; WP02/07||Keywords:||Time-to-build investment; Uncertainty; Strategic commitment; Flexibility; Oligopoly||Subject LCSH:||Investments
|Other versions:||http://www.ucd.ie/economics/research/papers/2002/WP02.07.pdf||Language:||en||Status of Item:||Not peer reviewed|
|Appears in Collections:||Economics Working Papers & Policy Papers|
Show full item record
Page view(s) 20145
This item is available under the Attribution-NonCommercial-NoDerivs 3.0 Ireland. No item may be reproduced for commercial purposes. For other possible restrictions on use please refer to the publisher's URL where this is made available, or to notes contained in the item itself. Other terms may apply.