Strategic investment with positive externalities

• 成果类型: Article
• 署名作者: Steg, Jan-Henrik; Thijssen, Jacco J. J.
• 署名单位: University of Graz; University of York - UK
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2022.11.013
• 发表日期: 2023
• 页码: 1-21
• 关键词: real options; externalities; preemption; war of attrition; optimal stopping; Multi-dimensional

摘要

We study strategic investment in continuous time with positive externalities of changing magnitude. Our model particularly allows for two correlated risk factors. Constructing subgame-perfect equilibria with pure and mixed strategies, we observe the novel effect that it is important for the firms to anticipatepreemption. In fact, the presence of a second risk factor implies also an additional strategic risk. We quantify the associated extra waiting cost and show that it is ex ante uncertain whether investment will happen when there is a first- or a second-mover advantage. Our formal arguments involve several methodological contributions. In addition, we provide detailed specifications of our basic model to address various applications. (c) 2022 The Author(s). Published by Elsevier Inc. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).