 Real Options Games Between Asymmetric Firms on a Competitive MarketElżbieta Rychłowska-Musiał ()
Chapter Chapter 23 in Advances in Panel Data Analysis in Applied Economic Research, 2018, pp 299-310 from Springer Abstract: Abstract The main goal and the original contribution of this paper are to find and describe optimal investment strategies for asymmetric firms acting on a competitive market. Investment decision-making process is described as a game between two players, and the real options approach is used to find a value of an investment project; therefore, the paper falls in the area of the real options games (ROG). We also study the effect of a project risk level (measured by volatility) on a firm’s investment strategy and examine a case of symmetric firms as well. It is no surprise that the advantage is mostly on the side of a dominant company, but under some circumstances, a weaker party has a very strong bargaining chip. Firms may cooperate, and their negotiations could be supported by a payoff transfer computed as the coco value. It also turned out that the cooperation between competitors gains in significance when a project risk is high regardless of whether firms are asymmetric or symmetric. Date: 2018 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-319-70055-7_23 Ordering information: This item can be ordered from DOI: 10.1007/978-3-319-70055-7_23 Access Statistics for this chapter More chapters in Springer Proceedings in Business and Economics from Springer |
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