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Project Selection: Commitment and Competition

Author

Listed:
  • Vidya Atal

    (Monclair State University)

  • Talia Bar

    (University of Connecticut)

  • Sidartha Gordon

    (Sciences Po)

Abstract

We examine project selection decisions of rms constrained in the number of projects they can handle at once. Taking on a project requires a commitment of uncertain duration, restricting the rm from selecting another project in subsequent periods. Due to the capacity constraints and need for commitment, some positive return projects are rejected. In a sequential move dynamic game, we fi nd that the first mover strategically rejects some projects that are then selected by the second mover, even when both fi rms are symmetric and equally informed. We study the effects of competition on project selection, and compare the jointly optimal selection decision to the behavior of strategic non-cooperative firms.

Suggested Citation

  • Vidya Atal & Talia Bar & Sidartha Gordon, 2014. "Project Selection: Commitment and Competition," Working papers 2014-28, University of Connecticut, Department of Economics.
    • Handle: RePEc:uct:uconnp:2014-28
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    References listed on IDEAS

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    Cited by:

    1. Philippe Bich & Rida Laraki, 2014. "On the Existence of Approximate Equilibria and Sharing Rule Solutions in Discontinuous Games," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01071678, HAL.
    2. Khalifa Mohammed Al-Sobai & Shaligram Pokharel & Galal M. Abdella, 2020. "Perspectives on the Capabilities for the Selection of Strategic Projects," Sustainability, MDPI, vol. 12(19), pages 1-20, October.
    3. Philippe Bich & Rida Laraki, 2014. "On the Existence of Approximate Equilibria and Sharing Rule Solutions in Discontinuous Games," Working Papers hal-01071678, HAL.

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    More about this item

    Keywords

    project selection; search; commitment; Markov perfect equilibrium;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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