Internet Portals as Portfolios of Entry Options
AbstractWe investigate the valuation of platform investment, such as asoftware operating system or anInternet portal WebPage. Platform investment is the creation of aninnovative distribution andproduction infrastructure, which increases access to customers; as aresult it reduces entry costs inrelated products. Relative to conventional producers, firms builtaround platforms enjoy enhancedentry options in uncertain market segments, to be exercised at theoptimal strategic timing. Whenthe platform grants a strong strategic advantage, the innovator firmcan optimally choose the timingof entry when its strategic gain exceeds the value of the waitingoption; in case of weakeradvantage, the platform firm enters just before its competitor would.In a context of increaseduncertainty, the relative value of platform to traditional strategiesincreases; the value of waiting toinvest rises, but the value of platforms increases even more. In somecases, platform can reduceentry by making parallel monopoly sustainable.
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.
Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-105/2.
Date of creation: 05 Dec 2000
Date of revision:
Contact details of provider:
Web page: http://www.tinbergen.nl
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Kort, P.M. & Pawlina, G., 2003.
"Strategic capital budgeting: Asset replacement under uncertainty,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-123062, Tilburg University.
- Pawlina, G. & Kort, P.M., 2001. "Strategic Capital Budgeting: Asset Replacement Under Uncertainty," Discussion Paper 2001-4, Tilburg University, Center for Economic Research.
- Grzegorz Pawlina & Peter M. Kort, 2006.
"Real Options in an Asymmetric Duopoly: Who Benefits from Your Competitive Disadvantage?,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 15(1), pages 1-35, 03.
- Pawlina, G. & Kort, P.M., 2001. "Real Options in an Aymmetric Duopoly: Who Benefits from your Competitive Disadvantage," Discussion Paper 2001-95, Tilburg University, Center for Economic Research.
- Mehari Mekonnen Akalu, 2002. "Measuring and Ranking Value Drivers," Tinbergen Institute Discussion Papers 02-043/2, Tinbergen Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antoine Maartens (+31 626 - 160 892)).
If references are entirely missing, you can add them using this form.