Learning and investment under demand uncertainty in container shipping

• 成果类型: Article
• 署名作者: Jeon, Jihye
• 署名单位: Boston University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12406
• 发表日期: 2022
• 页码: 226-259
• 关键词: perfect industry dynamics; entry; MODEL; irreversibility; fluctuations; inflation; FRAMEWORK; auctions; BEHAVIOR; IMPACT

摘要

This article investigates the role of demand uncertainty in explaining cyclical investment fluctuations in the container shipping industry. I develop and estimate a dynamic oligopoly model with learning in which firms choose investment and scrapping. In this model, firms are uncertain about the true parameters in the underlying process for demand, and form and revise their beliefs using available information. Counterfactual analysis reveals that uncertainty about the demand process amplifies investment cycles through (i) leading firms to revise beliefs more drastically as they experience demand fluctuations, and (ii) intensifying strategic incentives among firms.