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Strategic investment in innovation : Capacity and timing decisions under uncertainty

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  • Huberts, Nick

    (Tilburg University, School of Economics and Management)

Abstract

This dissertation comprises of two parts. The first part focusses on the optimal investment problem of incumbent firms when they are offered the option to start the production of a new product that yields an innovation compared to the established product. We start with the incumbent-entrant problem in Chapter 2. Chapter 3 looks at incumbent firms that have the option to expand their current production lines by offering a new generation of the existing product. In Chapter 4, we look at the situation where incumbent firms can choose their optimal moment to replace their current technology for a new, better, technology. The second part of this dissertation looks at the optimal investment timing in a setting with a birth-death process.

Suggested Citation

  • Huberts, Nick, 2017. "Strategic investment in innovation : Capacity and timing decisions under uncertainty," Other publications TiSEM 6473e1df-9b8d-49ae-99f8-b, Tilburg University, School of Economics and Management.
  • Handle: RePEc:tiu:tiutis:6473e1df-9b8d-49ae-99f8-b4749a4dc924
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    1. 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.
    2. 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, June.
    3. Tsekrekos, Andrianos E., 2010. "The effect of mean reversion on entry and exit decisions under uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 34(4), pages 725-742, April.
    4. Vinh Du Tran & David S. Sibley & Simon Wilkie, 2012. "Second Mover Advantage and Entry Timing," Journal of Industrial Economics, Wiley Blackwell, vol. 60(3), pages 517-535, September.
    5. Robert Swinney & GĂ©rard P. Cachon & Serguei Netessine, 2011. "Capacity Investment Timing by Start-ups and Established Firms in New Markets," Management Science, INFORMS, vol. 57(4), pages 763-777, April.
    6. Vardy, Felix, 2004. "The value of commitment in Stackelberg games with observation costs," Games and Economic Behavior, Elsevier, vol. 49(2), pages 374-400, November.
    7. Yoon, Young-Ro, 2009. "Endogenous timing of actions under conflict between two types of second mover advantage," International Journal of Industrial Organization, Elsevier, vol. 27(6), pages 728-738, November.
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