Preemption with a second-mover advantage
Vladimir Smirnov () and
Games and Economic Behavior, 2021, vol. 129, issue C, 294-309
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)
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Working Paper: Preemption with a Second-Mover Advantage (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:129:y:2021:i:c:p:294-309
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