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    Investment timing under uncertainty in oligopoly: Symmetry or leadership?


    Dewit, Gerda (2006) Investment timing under uncertainty in oligopoly: Symmetry or leadership? Journal of Economics and Business, 58. pp. 1-19. ISSN 0148-6195

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    Abstract

    This paper examines firms’ investment-timing decisions in an oligopolistic set-up. Facing demand uncertainty, firms decide whether to invest early or wait until uncertainty has been resolved. We show that the precise form that investment commitment takes matters for the investment-timing outcomes that emerge. When firms can commit immediately to the final investment level, investment leadership may occur and early investment is referred to as being primarily “aggressive”. By contrast, the presence of a time lag between when and how much firms invest yields symmetric investment-timing outcomes only; we argue that early investment is mainly “defensive” in that case.

    Item Type: Article
    Keywords: Uncertainty; Flexibility; Strategic commitment;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 8440
    Depositing User: Gerda Dewit
    Date Deposited: 12 Jul 2017 10:35
    Journal or Publication Title: Journal of Economics and Business
    Publisher: Elsevier
    Refereed: Yes
    URI:

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