CEF.UP – FIN Seminar/Webinar

Thursday – September 28^th, 2023 at 1:00 p.m. | Room 305| Online

“First and Second Mover Advantages in Strategic Investment under Uncertainty”

Peter Kort  – Tilburg University (joint work with Berend J. Stofferis, and Jacco J.J. Thijssen)

Abstract:

“We study a strategic duopoly investment game in which two firms decide on timing and size of an investment under iso-elastic demand. We find that, in equilibrium, investment can be preemptive or resulting from a war of attrition. This contrasts with existing literature that only finds preemptive investment. We show numerically that the presence of a second mover advantage can delay investment inefficiently long from a social welfare perspective.”