Option Values in Sequential Markets
AbstractWe consider competitive behaviour in sequential markets when current success or failure may affect the probability of future market opportunities. The analysis is conducted in a set up which may be interpreted as two private-value, sealed-bid, second-price sequential auctions. We demonstrate that whether agents price higher or lower than in the corresponding static context depends on the relative magnitudes of the 'winner's option value' and the 'loser's option value' of participating in the later market.
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Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 07/1998.
Length: 28 pages
Date of creation: 1998
Date of revision:
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Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
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- Leandro Arozamena & Estelle Cantillon, 2004.
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