Investment Decisions Under Hidden Competition

10 Pages Posted: 4 Mar 2013

See all articles by Paulo Jorge Pereira

Paulo Jorge Pereira

University of Porto, School of Economics and Management

Manuel J. Rocha Armada

University of Minho

Date Written: September 2, 2009

Abstract

We present simple a model adequate for investment decisions in duopolies under total hidden competition. In this competitive context all potential entrants remain unrevealed until they decide to move into the market. The value-functions and the optimal entry thresholds are derived.

Keywords: hidden competition, duopolies, real options

JEL Classification: G31, D82

Suggested Citation

Pereira, Paulo and Rocha Armada, Manuel José, Investment Decisions Under Hidden Competition (September 2, 2009). Available at SSRN: https://ssrn.com/abstract=2227316 or http://dx.doi.org/10.2139/ssrn.2227316

Paulo Pereira (Contact Author)

University of Porto, School of Economics and Management ( email )

Rua Roberto Frias
s/n
Porto, 4200-464
Portugal

Manuel José Rocha Armada

University of Minho ( email )

Sch. Economics & Bus Administration
Gualtar
Braga, MINHO 4710-057
Portugal
+351 253 60 44 55 (Phone)

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