Exit in duopoly under uncertainty

@inproceedings{Murto2003ExitID,
  title={Exit in duopoly under uncertainty},
  author={Pauli Murto},
  year={2003}
}
This paper examines a declining duopoly, where the firms must choose when to exit from the market. The uncertainty is modeled by letting the revenue stream follow a geometric Brownian motion. We consider the Markovperfect equilibrium in firms’ exit strategies. With a low degree of uncertainty there is a unique equilibrium, where one of the firms always exits before the other. However, when uncertainty is increased, another equilibrium with the reversed order of exit may appear ruining the… CONTINUE READING
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