Publication Type
Journal Article
Version
publishedVersion
Publication Date
7-2014
Abstract
A monopolist typically defers entry into an industry as both price uncertainty and the level of risk aversion increase. By contrast, the presence of a rival typically hastens entry under risk neutrality. Here, we examine these two opposing effects in a duopoly setting. We demonstrate that the value of a firm and its entry decision behave differently with risk aversion and uncertainty depending on the type of competition. Interestingly, if the leader’s role is defined endogenously, then higher uncertainty makes her relatively better off, whereas with the roles exogenously defined, the impact of uncertainty is ambiguous.
Keywords
Investment analysis, Real options, Competition, Risk aversion
Discipline
Business Administration, Management, and Operations
Research Areas
Operations Management
Publication
European Journal of Operational Research
Volume
236
Issue
2
First Page
643
Last Page
656
ISSN
0377-2217
Identifier
10.1016/j.ejor.2014.01.018
Publisher
Elsevier: 24 months
Embargo Period
8-29-2021
Citation
CHRONOPOULOS, Michail; DE REYCK, Bert; and SIDDIQUI, Afzal.
Duopolistic competition under risk aversion and uncertainty. (2014). European Journal of Operational Research. 236, (2), 643-656.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/6758
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.