Entry deterrence and hidden competition

Maria N. Lavrutich, Kuno J.M. Huisman and Peter Kort

Journal of Economic Dynamics and Control, 2016, vol. 69, issue C, 409-435

Abstract: This paper studies strategic investment behavior of firms facing an uncertain demand in a duopoly setting. Firms choose both investment timing and the capacity level while facing additional uncertainty about market participants, which is introduced via the concept of hidden competition. We focus on the analysis of possible strategies of the market leader in terms of its capacity choice and on the influence of hidden competition on these strategies.

Keywords: Real options; Investment under uncertainty; Entry deterrence/accomodation; Duopoly; Capacity choice (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:69:y:2016:i:c:p:409-435

DOI: 10.1016/j.jedc.2016.05.012

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