Timing of investments in oligopoly under uncertainty: A framework for numerical analysis

@article{Murto2004TimingOI,
  title={Timing of investments in oligopoly under uncertainty: A framework for numerical analysis},
  author={Pauli Murto and Erkka N{\"a}s{\"a}kk{\"a}l{\"a} and Jussi Keppo},
  journal={European Journal of Operational Research},
  year={2004},
  volume={157},
  pages={486-500}
}
We present a modeling framework for the analysis of investments in an oligopoly market for a homogenous commodity. The demand evolves stochastically and the firms carry out investment projects in order to adjust their production cost functions or production capacities. The model is formulated as a discrete time state-space game where the firms use feedback strategies. The firms are assumed to move sequentially to ensure a unique Markov-perfect Nash equilibrium. Once the equilibrium has been… CONTINUE READING

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