Permanent URL to this publication: http://dx.doi.org/10.5167/uzh-1149
Athey, Susan; Schmutzler, Armin (2001). Investment and market dominance. RAND Journal of Economics, 32(1):1-26.
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We analyze a model of oligopolistic competition with ongoing investment. Special cases include incremental investment, patent races, learning by doing, and network externalities. We investigate circumstances under which a firm with low costs or high quality will extend its initial lead through investments. To this end, we derive a new comparative statics result for general games with strategic substitutes, which applies to our investment game. Finally, we highlight plausible countervailing effects that arise when investments of leaders are less effective than those of laggards, or in dynamic games when firms are sufficiently patient.
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|Item Type:||Journal Article, refereed|
|Communities & Collections:||03 Faculty of Economics > Department of Economics|
|Deposited On:||11 Feb 2008 12:21|
|Last Modified:||27 Nov 2013 18:40|
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