IDEAS home Printed from
   My bibliography  Save this article

La grenouille qui se peut faire aussi grosse que le boeuf


  • Philippe Fevrier
  • Laurent Linnemer


Quite often, a firm has to decide between investing in a safe project ("small") where rewards and losses remain moderate and a risky alternative ("big") where the rewards and the losses are larger. We study such a choice in a context where the probability of success depends both on the intrinsic ability of the firm and on the choice of an other firm which is a follower. The ability of the follower is unknown to the leader and vice-versa. We show that a leader with a poor ability selects the big project as well as a leader with a very high ability. On the other hand a leader with a medium ability prefers the small project. When weak the follower chooses the small project, when of medium ability it chooses randomly and when of high ability it selects the big project. informatio asymmetry, though, prevents the selection of the best firm: a leader with a lower ability can deter competition form a medium or weak follower by selecting the big project.

Suggested Citation

  • Philippe Fevrier & Laurent Linnemer, 2004. "La grenouille qui se peut faire aussi grosse que le boeuf," Annals of Economics and Statistics, GENES, issue 73, pages 199-225.
  • Handle: RePEc:adr:anecst:y:2004:i:73:p:199-225

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:adr:anecst:y:2004:i:73:p:199-225. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laurent Linnemer). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.