Endogenous Leadership in a New Market
AbstractIn this article I analyze strategic investment under uncertainty in a new market, where firms face a tradeoff between commitment and flexibility. The model predicts asymmetric equilibria under fairly general conditions, even though firms are ex ante identical and have symmetric opportunities to enter the market. In equilibrium, one firm commits to early investment and the other firm follows a wait-and-see strategy. In the ex post outcome, firms end up with asymmetric sizes if the market profitability turns out close to, or lower than, expected; firms end up in symmetric position if the market turns out highly profitable. If uncertainty is small, the model yields (approximately) Stackelberg outcomes.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 27 (1996)
Issue (Month): 4 (Winter)
Contact details of provider:
Web page: http://www.rje.org
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Rafael Rob & Nikolaos Vettas, 2003.
"Foreign Direct Investment and Exports with Growing Demand,"
PIER Working Paper Archive
03-001, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Rafael Rob & Nikolaos Vettas, 2003. "Foreign Direct Investment and Exports with Growing Demand," Review of Economic Studies, Wiley Blackwell, vol. 70(3), pages 629-648, 07.
- Rob, Rafael & Vettas, Nikolaos, 2001. "Foreign Direct Investment and Exports with Growing Demand," CEPR Discussion Papers 2786, C.E.P.R. Discussion Papers.
- Rafael Rob & Nikolaos Vettas, 2001. "Foreign Direct Investment and Exports with Growing Demand," Penn CARESS Working Papers f8c083d9257897f97ff49d054, Penn Economics Department.
- Illoong Kwon, 2008. "Separating the Roles of Chairman and CEO: A Model of Leadership and Authority," Discussion Papers 08-06, University at Albany, SUNY, Department of Economics.
- Orlando I. Balboa & Andrew F. Daughety & Jennifer F. Reinganum, 2004.
"Market Structure and the Demand for Free Trade,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 13(1), pages 125-150, 03.
- Orlando I. Balboa & Andrew F. Daughety & Jennifer F. Reinganum, 2001. "Market Structure and the Demand for Free Trade," Vanderbilt University Department of Economics Working Papers 0112, Vanderbilt University Department of Economics, revised Dec 2002.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.