Real options in an asymmetric duopoly: who benefits from your competitive disadvantage?

This paper analyzes the impact of investment cost asymmetry on the optimal real option exercise strategies and the value of firms in duopoly. Both firms have an opportunity to invest in a project enhancing (ceteris paribus) the profit flow. We show that three types of equilibrium strategies exist. Furthermore, we express the critical levels of cost asymmetry delineating the equilibrium regions as functions of basic economic variables. The presence of strategic interactions among the firms leads to counterintuitive results. First, for a certain range of the asymmetry level, a marginal increase in the investment cost of the firm with the cost disadvantage can enhance this firm's own value. Moreover, such a cost increase can reduce the value of the competitor. Finally, we discuss the welfare implications of the optimal exercise strategies and show that the presence of identical firms can result in a socially less desirable outcome than if one of the competitors has a significant cost (dis)advantage

INVENTORIES AND FIXED INVESTMENT

We model fixed investment incorporating the inventory decision of the firm. Using Dutch listed nonfinancial firms during 1985-2000, we find that the inventory stock is negatively associated with fixed investment. The results suggest that the inventory stock may be used by the firm as a buffer in response to unexpectedly high demand. In addition, the firm may hold the inventory stock as a contingency substitute for the financial source of fixed investment. Copyright Blackwell Publishing Ltd/University of Adelaide and Flinders University of South Australia 2004.

Real options with unknown-date events

Investment under uncertainty, Option value, Simple and compound options, Bad news principle, Hazard rate, D81, G31, L12,

Business R&D and the Interplay of R&D Subsidies and Product Market Uncertainty

R&D, Real options theory, Uncertainty, H25, L60, O3,

First detection of two superoutbursts during the rebrightening phase of a WZ Sge-Type dwarf nova: TCP J21040470+4631129

© 2020 The Author(s) 2020. Published by Oxford University Press on behalf of the Astronomical Society of Japan. We report on photometric and spectroscopic observations and analysis of the 2019 superoutburst of TCP J21040470+4631129. This object showed a 9 mag superoutburst with early superhumps and ordinary superhumps, which are the features of WZ Sge-Type dwarf novae. Five rebrightenings were observed after the main superoutburst. The spectra during the post-superoutburst stage showed Balmer, He i, and possible sodium doublet features. The mass ratio is derived as 0.0880(9) from the period of the superhump. During the third and fifth rebrightenings, growing superhumps and superoutbursts were observed, which have never been detected during a rebrightening phase among WZ Sge-Type dwarf novae with multiple rebrightenings. To induce a superoutburst during the brightening phase, the accretion disk needs to have expanded beyond the 3: 1 resonance radius of the system again after the main superoutburst. These peculiar phenomena can be explained by the enhanced viscosity and large radius of the accretion disk suggested by the higher luminosity and the presence of late-stage superhumps during the post-superoutburst stage, plus by more mass supply from the cool mass reservoir and/or from the secondary because of the enhanced mass transfer than those of other WZ Sge-Type dwarf novae