3 research outputs found
Entry Deterrence by Timing Rather than Overinvestment in a Strategic Real Options Framework
Huberts NFD, Dawid H, Huisman K, Kort PM. Entry Deterrence by Timing Rather than Overinvestment in a Strategic Real Options Framework. Working Papers in Economics and Management. Vol 02-2015. Bielefeld: Bielefeld University, Department of Business Administration and Economics; 2015.This paper examines a dynamic incumbent-entrant framework with stochastic evolution of the (inverse)
demand, in which both the optimal timing of the investments and the capacity choices are explicitly
considered. We find that the incumbent invests earlier than the entrant and that entry deterrence is
achieved through timing rather than through overinvestment. This is because the incumbent invests
earlier and in a smaller amount compared to a scenario without potential entry. If, on the other hand,
the capacity size is exogenously given, the investment order changes and the entrant invests before the
incumbent does
Entry deterrence by timing rather than overinvestment in a strategic real options framework
This paper examines a dynamic incumbent-entrant framework with stochastic evolution of the (inverse) demand, in which both the optimal timing of the investments and the capacity choices are explicitly considered. We find that the incumbent invests earlier than the entrant and that entry deterrence is achieved through timing rather than through overinvestment. This is because the incumbent invests earlier and in a smaller amount compared to a scenario without potential entry. If, on the other hand, the size of the investment is exogenously given, the investment order changes and the entrant invests before the incumbent does
Entry deterrence by timing rather than overinvestment in a strategic real options framework
This paper examines a dynamic incumbent-entrant framework with stochastic evolution of the (inverse) demand, in which both the optimal timing of the investments and the capacity choices are explicitly considered. We find that the incumbent invests earlier than the entrant and that entry deterrence is achieved through timing rather than through overinvestment. This is because the incumbent invests earlier and in a smaller amount compared to a scenario without potential entry. If, on the other hand, the size of the investment is exogenously given, the investment order changes and the entrant invests before the incumbent does