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Preemption with a second-mover advantage

Vladimir Smirnov and Andrew Wait

Games and Economic Behavior, 2021, vol. 129, issue C, 294-309

Abstract: We examine a timing game with complete information and observable actions when there is a second-mover advantage. Allowing for heterogenous payoffs between players and for both leader and follower payoff functions to be multi-peaked and non-monotonic, we develop a new solution method to characterize the pure-strategy equilibria. Sometimes these resemble familiar second-mover advantage equilibria from the literature. However, we show, despite a follower advantage at all times for both players, that there can be a preemption equilibrium. Our generic solution method can be applied to a range of applications, such as market entry, innovation and holdout games for rival sellers of complementary assets.

Keywords: Timing games; Second-mover advantage; Preemption (search for similar items in EconPapers)
JEL-codes: C72 L13 O31 O33 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Preemption with a Second-Mover Advantage (2020) Downloads
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DOI: 10.1016/j.geb.2021.06.003

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