Economics at your fingertips  

A game-theoretic traverse analysis: Price competition and strategic investment

Andrea Mantovi () and Augusto Schianchi

Structural Change and Economic Dynamics, 2019, vol. 49, issue C, 301-311

Abstract: A model of transitional dynamics is set forth in a neo-Austrian setting for the competition between a pair of firms. A leader firm transforms technical advantages into strategic ones by combining price competition with the introduction of a superior technique. Suitably defined master integrals enable one to keep track, in an analytically convenient way, of the neo-Austrian effects occurring along the traverse path. Backward induction reduces the investment timing problem to the fundamental real option of waiting to invest. Structural change is thereby addressed along the lines of modern ‘option-game-theoretic’ strategic investment problems. Conceptual implications of the results are thoroughly discussed.

Keywords: Traverse; Golden rule; Backward induction; Real options (search for similar items in EconPapers)
JEL-codes: C7 O4 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Structural Change and Economic Dynamics is currently edited by F. Duchin, H. Hagemann, M. Landesmann, R. Scazzieri, A. Steenge and B. Verspagen

More articles in Structural Change and Economic Dynamics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-11-26
Handle: RePEc:eee:streco:v:49:y:2019:i:c:p:301-311