Time-to-build investment and uncertainty in oligopoly

Arbeitspapier

This paper examines how time to build alters strategic investment behaviour under oligopoly. Facing demand uncertainty, firms decide whether to invest early or wait until uncertainty has been resolved. A game that captures time-to-build investment is contrasted with another one in which investment is quick in place. We show that a time lag between when and how much to invest reduces the incentive to delay. When investment requires time to complete, early investment occurs more to avoid becoming a follower than to become a strategic investment leader. The opposite is true with quick-in-place investment. A brief welfare analysis is provided.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Centre for Economic Research Working Paper Series ; No. WP02/07

Classification and Topics

• Classification: Wirtschaft ; Information, Knowledge, and Uncertainty: General ; Oligopoly and Other Imperfect Markets
• Subject: Time-to-build Investment ; Uncertainty ; Strategic Commitment ; Flexibility ; Oligopoly ; Anlageverhalten ; Zeitökonomie ; Oligopol ; Theorie ; Entscheidung bei Unsicherheit

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dewit, Gerda ; Leahy, Dermot
• Event: Veröffentlichung
• (who): University College Dublin, Department of Economics
• (where): Dublin
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/72335
• Last update: 10.03.2025, 11:43 AM CET