Publication
Title
Strategic capacity investment under uncertainty
Author
Abstract
This article considers investment decisions within an uncertain dynamic and duopolistic framework. Each investment decision involves to determine the timing and the capacity level. The simultaneous analysis of timing and capacity decisions extends work on entry deterrence/accommodation to consider a timing/delay element. We find that, when applying an entry deterrence policy, the first investor, or incumbent, overinvests in capacity for two reasons. First, it delays the investment of the second investor, or entrant. Second, the entrant will invest in less capacity. We also find that greater uncertainty makes entry deterrence more likely.
Language
English
Source (journal)
The rand journal of economics. - Mount Morris, Ill.
Publication
Mount Morris, Ill. : 2015
ISSN
0741-6261 [print]
1756-2171 [online]
Volume/pages
46:2(2015), p. 376-408
ISI
000353455400007
Full text (Publisher's DOI)
UAntwerpen
Faculty/Department
Research group
Publication type
Subject
Affiliation
Publications with a UAntwerp address
External links
Web of Science
Record
Identification
Creation 08.04.2016
Last edited 13.06.2017
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