Thijssen, J.J.J., Huisman, K.J.M. and Kort, P.M. (2006) The effects of information on strategic investment and welfare. Economic Theory, 28 (2). pp. 399-424. ISSN 1432-0479
Full text not available from this repository.Abstract
The paper analyses the influence of uncertainty and competition on the strategic considerations of a firm’s investment decision, where the firm receives imperfect signals about the profitability of an investment project. We find a preemptive or an attrition equilibrium depending on a trade-off between first and second mover advantages. We show that welfare can be negatively affected by decreasing uncertainty, i.e. more and/or better information. Furthermore, simulations indicate that duopoly leads to higher welfare than monopoly if there are few and relatively non-informative signals, whereas the opposite holds if there are many and relatively informative signals.
| Item Type: | Article |
|---|---|
| Academic Units: | The University of York > Mathematics (York) |
| Depositing User: | York RAE Import |
| Date Deposited: | 05 Jun 2009 14:23 |
| Last Modified: | 05 Jun 2009 14:23 |
| Published Version: | http://dx.doi.org/10.1007/s00199-005-0628-3 |
| Status: | Published |
| Publisher: | Springer Verlag |
| Identification Number: | 10.1007/s00199-005-0628-3 |
| URI: | http://eprints.whiterose.ac.uk/id/eprint/6032 |
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