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Industry Development under Alternative Market Structures

Author

Listed:
  • Boyer, M.
  • Lasserre, P.
  • Mariotti, T.
  • Moreaux, M.

Abstract

We study the development of an industry-evolution of capacity, production and prices- in a continuous-time real-options model under various assumptions on competition. Investment takes the form of sequential acquisition of indivisible units of capacity. As benchmarks, we determine the optimal investment policy of an efficient social surplus maximizer, and that of a protected monopoly. Then we study two types of duopoly: when firms are committed ex ante to invest in alternating order so that the preemptive bahavior is rules out; and when the firms are not committed to any specific capacity of invertments, a generalization of Fudenberg & Tirole (1985) to a stochastic real-options context.

Suggested Citation

  • Boyer, M. & Lasserre, P. & Mariotti, T. & Moreaux, M., 1998. "Industry Development under Alternative Market Structures," Papers 98.497, Toulouse - GREMAQ.
    • Handle: RePEc:fth:gremaq:98.497
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    Citations

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    Cited by:

    1. Marcel Boyer & Jacques Robert, 1997. "Competition and Access in Electricity Markets: ECPR, Global Price Cap, and Auctions," CIRANO Working Papers 97s-41, CIRANO.
    2. Marcel Boyer & Pierre Lasserre & Michel Moreaux, 1998. "Emerging environmental problems, irreversible remedies, and myopia in a two country setup," Revue d'Économie Industrielle, Programme National Persée, vol. 83(1), pages 47-61.

    More about this item

    Keywords

    MARKETS STRUCTURES ; OLIGOPOLIES ; MONOPOLIES ; GAME THEORY;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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