Coordination and Cooperation in Investment Timing with Externalities ?
We characterize sequential (preemption) and simultaneous (coordination) equilibria, as well as joint-value maximizing (cooperation) solutions, in a model of investment timing allowing for externalities in both flow pro...ts and investment costs. For two ex-ante symmetric ...rms, either preemption or attrition occur depending on the size of the investment externality. Coordination is less likely with more discounting, as in a repeated game, and more likely with higher growth and volatility. Optimal cooperation involves either monopoly or duopoly investment, the latter being either symmetric or asymmetric. Finally, these characterizations are validated by applications to standard speci...cations of capacity accumulation and of R&D investment. In the former setup, coordination is likelier if installed capacities and lumpy investments are both large. With R&D input choices, if investment synergies are large, coordination and cooperation result in the same outcomes.
|Date of creation:||2011|
|Date of revision:|
|Publication status:||Published in Working paper GATE 2011-28. 2011|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00639471|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Grenadier, Steven R. & Wang, Neng, 2005.
"Investment timing, agency, and information,"
Journal of Financial Economics,
Elsevier, vol. 75(3), pages 493-533, March.
- Boyer, Marcel & Lasserre, Pierre & Moreaux, Michel, 2012.
"A dynamic duopoly investment game without commitment under uncertain market expansion,"
International Journal of Industrial Organization,
Elsevier, vol. 30(6), pages 663-681.
- Marcel Boyer & Pierre Lasserre & Michel Moreaux, 2011. "A Dynamic Duopoly Investment Game without Commitment under Uncertain Market Expansion," CIRANO Working Papers 2011s-65, CIRANO.
- Etienne Billette de Villemeur & Richard Ruble & Bruno Versaevel, 2011.
"Timing Vertical Relationships,"
- Ruble, Richard & Versaevel, Bruno & de Villemeur, Étienne, 2010. "Timing Vertical Relationships," TSE Working Papers 10-181, Toulouse School of Economics (TSE).
- Etienne Billette de Villemeur & Richard Ruble & Bruno Versaevel, 2010. "Timing Vertical Relationships," Post-Print halshs-00590310, HAL.
- Etienne Billette de Villemeur & Richard Ruble & Bruno Versaevel, 2011. "Timing Vertical Relationships," Post-Print halshs-00673939, HAL.
- Etienne Billette de Villemeur & Richard Ruble & Bruno Versaevel, 2011. "Timing Vertical Relationships," Post-Print halshs-00673936, HAL.
- Etienne Billette de Villemeur & Richard Ruble & Bruno Versaevel, 2010. "Timing Vertical Relationships," Post-Print halshs-00590313, HAL.
- J.J.J. Thijssen & K.J.M. Huisman & P.M. Kort, 2003.
"The Effects of Information on Strategic Investment and Welfare,"
Trinity Economics Papers
200310, Trinity College Dublin, Department of Economics.
- Jacco Thijssen & Kuno Huisman & Peter Kort, 2006. "The effects of information on strategic investment and welfare," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 28(2), pages 399-424, 06.
- Leahy, Dermot & Neary, J Peter, 2004.
"Symmetrical Research Joint Ventures: Cooperative Substitutes and Complements,"
CEPR Discussion Papers
4497, C.E.P.R. Discussion Papers.
- Leahy, Dermot & Neary, J. Peter, 2005. "Symmetric research joint ventures: Cooperative substitutes and complements," International Journal of Industrial Organization, Elsevier, vol. 23(5-6), pages 381-397, June.
- Dermot Leahy & J. Peter Neary, 2004. "Symmetric research joint ventures : cooperative substitutes and complements," Working Papers 200417, School of Economics, University College Dublin.
- Thijssen, Jacco J.J. & Huisman, Kuno J.M. & Kort, Peter M., 2012.
"Symmetric equilibrium strategies in game theoretic real option models,"
Journal of Mathematical Economics,
Elsevier, vol. 48(4), pages 219-225.
- Thijssen, J.J.J. & Huisman, K.J.M. & Kort, P.M., 2002. "Symmetric Equilibrium Strategies in Game Theoretical Real Option Models," Discussion Paper 2002-81, Tilburg University, Center for Economic Research.
- Désiré Vencatachellum & Bruno Versaevel, 2005.
"R&D Delegation in a Duopoly with Spillovers,"
Cahiers de recherche
05-01, HEC Montréal, Institut d'économie appliquée.
- Bruno Versaevel & Désiré Vencatachellum, 2006. "R&D Delegation in a Duopoly with Spillovers," Working Papers 0610, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
- Désiré Vencatachellum & Bruno Versaevel, 2006. "R&D Delegation in a Duopoly with Spillovers," Post-Print halshs-00142520, HAL.
- Mason, Robin & Weeds, Helen, 2010. "Investment, uncertainty and pre-emption," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 278-287, May.
- Huisman, K.J.M. & Kort, P.M., 1999. "Effects of Strategic Interactions on the Option Value of Waiting," Discussion Paper 1999-92, Tilburg University, Center for Economic Research.
- Hoppe, Heidrun C., 2000. "Second-mover advantages in the strategic adoption of new technology under uncertainty," International Journal of Industrial Organization, Elsevier, vol. 18(2), pages 315-338, February.
When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-00639471. 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: (CCSD)
If references are entirely missing, you can add them using this form.