Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72335
Authors: 
Dewit, Gerda
Leahy, Dermot
Year of Publication: 
2002
Series/Report no.: 
Working Paper Series, UCD Centre for Economic Research 02/07
Abstract: 
This paper examines how time to build alters strategic investment behaviour under oligopoly. Facing demand uncertainty, firms decide whether to invest early or wait until uncertainty has been resolved. A game that captures time-to-build investment is contrasted with another one in which investment is quick in place. We show that a time lag between when and how much to invest reduces the incentive to delay. When investment requires time to complete, early investment occurs more to avoid becoming a follower than to become a strategic investment leader. The opposite is true with quick-in-place investment. A brief welfare analysis is provided.
Subjects: 
Time-to-build Investment
Uncertainty
Strategic Commitment
Flexibility
Oligopoly
JEL: 
D80
L13
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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