On the welfare and policy implications of a two-period real option game

Congcong Wang, Shanshan Chen, Yuhan Wang, Bruno Antonio Pansera and Shravan Luckraz

Socio-Economic Planning Sciences, 2023, vol. 90, issue C

Abstract: We consider investment decisions in a discrete time, two-stage real option game where firms move sequentially, in the context of a Public-Private Partnership (PPP) problem. The value of the option depends on the market structure which we assume to be either a monopoly or a Bertrand differentiated duopoly. We show that, in an equilibrium where no firm invests in the first period, a government intervention, in form of a subsidy, can improve the welfare level.

Keywords: Real Options; Policy Implications; Decision; Common goods (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceps:v:90:y:2023:i:c:s003801212300229x

DOI: 10.1016/j.seps.2023.101717

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