An Analysis of Enterprise Investment Decision Based on Cournot-Nash Equilibrium

Hua Qi Chai; De Qiang Song; Shu Juan Luo

doi:10.4028/www.scientific.net/AMM.40-41.497

Paper Titles

Research of Zero-Cross Modulation Technology
p.473

The Research of Electromagnetic Interference in Metro Signal System
p.478

A Communication Framework for WSN Based Data Collection Applications
p.482

Genetic Algorithm Based on Permutation Distance for Laser Antimissile Problem
p.488

An Analysis of Enterprise Investment Decision Based on Cournot-Nash Equilibrium
p.497

A Multimedia System Based on OMAP3530
p.506

Design of Image Acquisition System Based on FPGA
p.510

Feature Extraction from Noisy Image Using Intersecting Cortical Model
p.516

A Face Recognition Algorithm Based on Block PCA and Wavelet Transform
p.523

HomeApplied Mechanics and MaterialsApplied Mechanics and Materials Vols. 40-41An Analysis of Enterprise Investment Decision...

An Analysis of Enterprise Investment Decision Based on Cournot-Nash Equilibrium

Abstract:

Cournot-Nash equilibrium is introduced into the traditional options game model, and the manifestation of this model under the condition is studied. Besides, a numerical method is used for solving investment values and thresholds of the leader enterprise and the follower enterprise. The results showed that both enterprises still have determined investment thresholds under Cournot-Nash equilibrium. In contrast, the follower enterprise investment threshold has a higher sensitivity to its own factors, but its present investment value is less subject to its own threshold and market demand; the leader enterprise performs contrary to the follower. Comparative advantages of marginal operating costs and investment sunk costs determine enterprise roles.

You might also be interested in these eBooks

View Preview

Info:

Periodical:

Applied Mechanics and Materials (Volumes 40-41)

Pages:

497-505

DOI:

https://doi.org/10.4028/www.scientific.net/AMM.40-41.497

Citation:

Cite this paper

Online since:

November 2010

Authors:

Hua Qi Chai, De Qiang Song, Shu Juan Luo

Keywords:

Cournot-Nash Equilibrium, Follower, Leader, Options Game

Export:

RIS, BibTeX

Price:

Permissions CCC:

Request Permissions

Permissions PLS:

Request Permissions

Сopyright:

Citation:

References

[1] Smets, Exporting versus FDI: the effect of uncertainty, irreversibilities and strategic interactions, New Haven: Yale University, (1991).

Google Scholar

[2] A. K. Dixit and R. S. Pindyck, Investment under Uncertainty, Connecticut: Princeton University Press, pp.136-160, (1994).

Google Scholar

[3] G. Pawlina and P.M. Kort, Real options in an asymmetric duopoly: who benefits you're your competitive disadvantage, Tilburg: Tilburg University, (2002).

DOI: 10.2139/ssrn.302784

Google Scholar

[4] S. Grenadier, Option Exercise Games: An application to the Equilibrium Investment Strategies of Firms, Review of Financial Studies, vol. 15, pp.691-721, (2001).

DOI: 10.1093/rfs/15.3.691

Google Scholar

[5] M.A.G. Dias and J. P. Teixeira, Continuous time option games: review of models and extensions. Part1: Duopoly under uncertainty, Washington DC: 7th Annual International Real Options Conference, (2003).

Google Scholar

[6] Shackleton, Tsekrekosb and Wojakowski, Strategic entry and market leadership in a two-player real options game, Journal of Banking & Finance, Vol. 28, pp.181-201, (2004).

DOI: 10.1016/s0378-4266(02)00403-x

Google Scholar

[7] Han Smit and Lenos Trigeorgis, Strategic Investment: Real Options and Games, Connecticut: Princeton University Press, pp.396-407, (2004).

Google Scholar