Title
Anticipation in innovative investment under oligopolistic competition Anticipation in innovative investment under oligopolistic competition
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Oxford ,
Subject
Computer. Automation
Source (journal)
Automatica / International Federation of Automatic Control. - Oxford
Volume/pages
48(2012) :11 , p. 2812-2823
ISSN
0005-1098
ISI
000310717100008
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
The paper studies the firms' optimal investment behavior in a dynamic duopoly framework. Embodied technological progress means later generations are more productive. The resulting model is a differential game combined with a vintage capital goods structure. Since such a framework has not been analyzed before, existing concepts have to be modified. After deriving that our solution is time consistent, our numerical analysis first shows that a technological breakthrough generates equilibrium investment behavior that admits anticipation waves, which are enhanced by competition. Second, the shape of these anticipation waves depends on the age of the underlying capital good: for younger capital goods the upward peaks are more pronounced, whereas for older ones this holds for the downward peaks. Third, we show that if a firm is able to anticipate on future technological developments, this results in a higher market share in the long run. (c) 2012 Elsevier Ltd. All rights reserved.
E-info
https://repository.uantwerpen.be/docman/iruaauth/f96b15/b443576.pdf
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