Project Selection: Commitment and Competition

Vidya Atal, Talia Bar and Sidartha Gordon ()

No 2014-28, Working papers from University of Connecticut, Department of Economics

Abstract: We examine project selection decisions of rms constrained in the number of projects they can handle at once. Taking on a project requires a commitment of uncertain duration, restricting the rm from selecting another project in subsequent periods. Due to the capacity constraints and need for commitment, some positive return projects are rejected. In a sequential move dynamic game, we fi nd that the first mover strategically rejects some projects that are then selected by the second mover, even when both fi rms are symmetric and equally informed. We study the effects of competition on project selection, and compare the jointly optimal selection decision to the behavior of strategic non-cooperative firms.

Keywords: project selection; search; commitment; Markov perfect equilibrium (search for similar items in EconPapers)
JEL-codes: D21 L10 L13 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2014-07
New Economics Papers: this item is included in nep-ind, nep-mic and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Project selection: Commitment and competition (2016)
Working Paper: Project selection: Commitment and competition (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2014-28

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