Strategic Capital Accumulation with Singular Control

Jan-Henrik Steg ()

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: We present a duopoly model of strategic capital accumulation in continuous time with uncertainty, such that investment takes the form of singular control. Spot competition is of Cournot type. For this model there exists a parameterized and Pareto-rankable family of Markov perfect equiblibria in symmetric strategies, according to which implicit collusion induces positive option values. However, preemption can also eliminate any option value in a limiting case corresponding to Bertrand prices.

JEL-codes: C73 D43 D92 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79948

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