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Industry Development under Alternative Market Structures

Marcel Boyer (), Pierre Lasserre, T. Mariotti and Michel Moreaux

Working Papers from Toulouse - GREMAQ

Abstract: We study the development of an industry-evolution of capacity, production and prices- in a continuous-time real-options model under various assumptions on competition. Investment takes the form of sequential acquisition of indivisible units of capacity. As benchmarks, we determine the optimal investment policy of an efficient social surplus maximizer, and that of a protected monopoly. Then we study two types of duopoly: when firms are committed ex ante to invest in alternating order so that the preemptive bahavior is rules out; and when the firms are not committed to any specific capacity of invertments, a generalization of Fudenberg & Tirole (1985) to a stochastic real-options context.

Keywords: MARKETS STRUCTURES; OLIGOPOLIES; MONOPOLIES; GAME THEORY (search for similar items in EconPapers)
JEL-codes: C73 D43 D92 L13 (search for similar items in EconPapers)
Date: 1998
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