Investment in oligopoly under uncertainty

The accordion effect

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper studies investments in new markets where more than two (anticipated) identical competitors are present. In case of three firms an accordion effect is detected: an exogenous demand shock results in a change of the wedge between investment thresholds of the first and second investor that is qualitatively different from the change of the wedge between the second and third investment threshold. Furthermore, it turns out that in the three-firm case the investment timing of the first investor lies in between the one and the two-firm case. These results are numerically extended to the n-firm case.
Original languageEnglish
Pages (from-to)320-331
JournalInternational Journal of Industrial Organization
Volume27
Issue number2
Publication statusPublished - 2009

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Uncertainty
Oligopoly
Investors
Demand shocks
Investment timing
Competitors
New markets

Cite this

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title = "Investment in oligopoly under uncertainty: The accordion effect",
abstract = "This paper studies investments in new markets where more than two (anticipated) identical competitors are present. In case of three firms an accordion effect is detected: an exogenous demand shock results in a change of the wedge between investment thresholds of the first and second investor that is qualitatively different from the change of the wedge between the second and third investment threshold. Furthermore, it turns out that in the three-firm case the investment timing of the first investor lies in between the one and the two-firm case. These results are numerically extended to the n-firm case.",
author = "R. Bouis and K.J.M. Huisman and P.M. Kort",
note = "Appeared earlier as CentER DP 2006-69",
year = "2009",
language = "English",
volume = "27",
pages = "320--331",
journal = "International Journal of Industrial Organization",
issn = "0167-7187",
publisher = "Elsevier Inc.",
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}

Investment in oligopoly under uncertainty : The accordion effect. / Bouis, R.; Huisman, K.J.M.; Kort, P.M.

In: International Journal of Industrial Organization, Vol. 27, No. 2, 2009, p. 320-331.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Investment in oligopoly under uncertainty

T2 - The accordion effect

AU - Bouis, R.

AU - Huisman, K.J.M.

AU - Kort, P.M.

N1 - Appeared earlier as CentER DP 2006-69

PY - 2009

Y1 - 2009

N2 - This paper studies investments in new markets where more than two (anticipated) identical competitors are present. In case of three firms an accordion effect is detected: an exogenous demand shock results in a change of the wedge between investment thresholds of the first and second investor that is qualitatively different from the change of the wedge between the second and third investment threshold. Furthermore, it turns out that in the three-firm case the investment timing of the first investor lies in between the one and the two-firm case. These results are numerically extended to the n-firm case.

AB - This paper studies investments in new markets where more than two (anticipated) identical competitors are present. In case of three firms an accordion effect is detected: an exogenous demand shock results in a change of the wedge between investment thresholds of the first and second investor that is qualitatively different from the change of the wedge between the second and third investment threshold. Furthermore, it turns out that in the three-firm case the investment timing of the first investor lies in between the one and the two-firm case. These results are numerically extended to the n-firm case.

M3 - Article

VL - 27

SP - 320

EP - 331

JO - International Journal of Industrial Organization

JF - International Journal of Industrial Organization

SN - 0167-7187

IS - 2

ER -