CAPITAL INVESTMENT IN A DUOPOLY AS A DIFFERENTIAL GAME.
Item
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Title
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CAPITAL INVESTMENT IN A DUOPOLY AS A DIFFERENTIAL GAME.
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Identifier
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AAI8801744
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identifier
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8801744
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Creator
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NGUYEN, DIEP.
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Contributor
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Ronald W. Anderson
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Date
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1987
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Language
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English
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Publisher
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City University of New York.
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Subject
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Economics, Theory
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Abstract
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Capital investment strategy in production and in research and development in a two-firm industry formulated as a differential game is examined in this dissertation. In the first part of our work we study firms' capital investment rates under certainty in an infinite horizon, continuous time model with discounting. We find that while the follower firm continuously invests as quickly as possible, the leader's optimal strategy depends on the firms' initial capitals. It may invest continuously, or start by not investing and then invest when its rival attains a certain size, or may start by investing but interrupt its growth for a time. We characterize analytically the locus of the switch points (from growth to no-growth or vice versa).;The second part analyzes firms' R&D expenditures under uncertainty of a technological breakthrough. We first review some classical static and dynamic models in the literature, in which firms are assumed identical. This assumption is relaxed in our dynamic, finite horizon two-firm model. We derive a system of simple equations characterizing the equilibrium and highlight the R&D competition effect. We also discuss properties of the equilibrium from the numerical solution of these equations.
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Type
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dissertation
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Source
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PQT Legacy CUNY.xlsx
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degree
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Ph.D.
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Program
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Economics
