Investment Timing and Capacity Choice under Uncertainty
Joint Authors
Xu, Shiqin
Tang, Xiaoling
Lv, Xiumei
Source
Issue
Vol. 2014, Issue 2014 (31 Dec. 2014), pp.1-9, 9 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2014-03-27
Country of Publication
Egypt
No. of Pages
9
Main Subjects
Abstract EN
This paper examines strategic investment between two firms that compete not only for investment timing but also for capacity under stochastic market demand.
The value functions of real option for the follower, the dominant leader, and the preemptive leader are derived and their investment decisions are investigated.
It finds that both firms will delay investment and the delayed margin of the follower will surpass that of theleader under greater uncertainty.
Furthermore, both firms will provide more outputs in the face of increasing uncertainty and the growth rate of the follower’s capacity will exceed that of the leader’s.
In addition, this paper finds that the follower will end up with a larger capacity than the leader.
American Psychological Association (APA)
Lv, Xiumei& Xu, Shiqin& Tang, Xiaoling. 2014. Investment Timing and Capacity Choice under Uncertainty. Abstract and Applied Analysis،Vol. 2014, no. 2014, pp.1-9.
https://search.emarefa.net/detail/BIM-1034019
Modern Language Association (MLA)
Lv, Xiumei…[et al.]. Investment Timing and Capacity Choice under Uncertainty. Abstract and Applied Analysis No. 2014 (2014), pp.1-9.
https://search.emarefa.net/detail/BIM-1034019
American Medical Association (AMA)
Lv, Xiumei& Xu, Shiqin& Tang, Xiaoling. Investment Timing and Capacity Choice under Uncertainty. Abstract and Applied Analysis. 2014. Vol. 2014, no. 2014, pp.1-9.
https://search.emarefa.net/detail/BIM-1034019
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-1034019