Firms` Strategic Decisions Theoretical and Empirical Findings

Volume: 1

Indexed in: EBSCO.

This eBook presents recent case studies on firms and their strategy employed in specific scenarios and industries. Readers will find, in this volume, an analysis of oligopolistic industries done by ...
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Strategic Investment Decisions in a Continuous- Time Dynamic Model with Complementary Goods

Pp. 88-97 (10)

Kazuhiro Ohnishi

Abstract

This chapter considers a continuous-time infinite-horizon duopoly model with complementary products. The chapter investigates the optimal level of labour investment by duopoly firms in a new complementary product industry. Based on the analysis of the model, it is shown that there exist multiple perfect equilibrium outcomes where both firms invest beyond their steady-state reaction curves.

Keywords:

Complementary goods, continuous-time dynamic model, earlystopping equilibrium, labour investment, late-stopping equilibrium, noncooperative game, perfect equilibrium, steady-state reaction curves, strategic complementarity, strategic investment decisions.

Affiliation:

Institute for Basic Economic Science, 2-15-12 Hanjo, Minoo, Osaka 562-0044, Japan.