Title: Investment, Exogenous Entry and Expandable Markets Under Uncertainty
Abstract:This paper proposes a real options model for a duopoly faced with an exogenous entry of a third competitor that can expand the market. Usually market positions appear as a stable status quo situation....This paper proposes a real options model for a duopoly faced with an exogenous entry of a third competitor that can expand the market. Usually market positions appear as a stable status quo situation. Competition exists while the duopoloy places are available and both firms fight for them, but after the entry of the follower, no more competitive damages or benefits are considered. The proposed model tries to modify this picture by considering the hypothesis of a third entry in the market, which depends upon an investment that can produce a market expansion. The likelihood of entry, its impact on the first firms’ market shares and the dimension of the expansion influences the behavior of the first two players.Read More
Publication Year: 2010
Publication Date: 2010-01-01
Language: en
Type: article
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Cited By Count: 1
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