Huberts, Nick Fijbo Dick, Dawid, Herbert, Huisman, Kuno J.M. et al. (1 more author) (2019) Entry deterrence by timing rather than overinvestment in a strategic real options framework. European Journal of Operational Research. pp. 165-185. ISSN 0377-2217
Abstract
This paper examines a dynamic incumbent-entrant framework with stochastic evolution of the (inverse) demand, in which both the optimal timing of the investments and the capacity choices are explicitly considered. We find that the incumbent invests earlier than the entrant and that entry deterrence is achieved through timing rather than through overinvestment. This is because the incumbent invests earlier and in a smaller amount compared to a scenario without potential entry. If, on the other hand, the size of the investment is exogenously given, the investment order changes and the entrant invests before the incumbent does.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2018 Published by Elsevier B.V. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. |
Keywords: | Game Theory,Incumbent/Entrant,Capacity choice,Investment under Uncertainty,Real Option Games,Real-option games,Investment under uncertainty,Game theory |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Social Sciences (York) > The York Management School |
Depositing User: | Pure (York) |
Date Deposited: | 26 Nov 2018 10:20 |
Last Modified: | 23 Jan 2025 05:23 |
Published Version: | https://doi.org/10.1016/j.ejor.2018.08.049 |
Status: | Published |
Refereed: | Yes |
Identification Number: | 10.1016/j.ejor.2018.08.049 |
Related URLs: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:139139 |
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Description: Entry deterrence by timing rather than overinvestment in a strategic real options framework
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