Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
6897445 | European Journal of Operational Research | 2014 | 14 Pages |
Abstract
A monopolist typically defers entry into an industry as both price uncertainty and the level of risk aversion increase. By contrast, the presence of a rival typically hastens entry under risk neutrality. Here, we examine these two opposing effects in a duopoly setting. We demonstrate that the value of a firm and its entry decision behave differently with risk aversion and uncertainty depending on the type of competition. Interestingly, if the leader's role is defined endogenously, then higher uncertainty makes her relatively better off, whereas with the roles exogenously defined, the impact of uncertainty is ambiguous.
Related Topics
Physical Sciences and Engineering
Computer Science
Computer Science (General)
Authors
Michail Chronopoulos, Bert De Reyck, Afzal Siddiqui,