Strategic Investment, Competition and the Independence Result

Steffen Ziss ()

No 137, Working Papers from University of Sydney, School of Economics

Abstract: The provision of capital in oligopoly is considered within the context of a two-stage capital then price or output game in which firms have non-zero conjectural variations in both stages. Capital is defined as any variable which affects demand or marginal cost. We demonstrate that there exist certain types of capital for which the strategic effect, which distinguishes two-stage models, can be signed independent of the level of competition in either stage. In addition we examine the role played by inconsistent second stage conjectures and distinct levels of competition across stages in determining the sign of the strategic effect.

Date: 1990-03
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Persistent link: https://EconPapers.repec.org/RePEc:syd:wpaper:2123/7597

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