Strategic Investment Under Uncertainty: A Synthesis

Chevalier-Roignant, Benoit; Flath, Christoph M.; Huchzermeier, Arnd; Trigeorgis, Lenos

doi:10.2139/ssrn.1543763

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Strategic Investment Under Uncertainty: A Synthesis

38 Pages Posted: 29 Jan 2010 Last revised: 24 Jun 2012

See all articles by Benoit Chevalier-Roignant

Benoit Chevalier-Roignant

EM Lyon (Ecole de Management de Lyon) - Emlyon Business School

Arnd Huchzermeier

WHU - Otto Beisheim School of Management

Lenos Trigeorgis

University of Cyprus - Department of Public and Business Administration; King’s College London; Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: November 16, 2010

Abstract

Research contributions providing insights at the intersection of real options analysis and industrial organization have become numerous in the recent decade. In the present paper, we provide an overview aimed at categorizing and relating these research streams. We highlight managerial insights about the type of competitive reaction, the manner in which information is revealed, the nature of the competitive advantage (first vs. second-mover advantage), firm heterogeneity, capital divisibility, and the number of competing firms.

Keywords: Finance, Investment under uncertainty, Real options, Strategic investment, Option games.

JEL Classification: G31, C73, L1

Suggested Citation: Suggested Citation

Chevalier-Roignant, Benoit and Flath, Christoph M. and Huchzermeier, Arnd and Trigeorgis, Lenos, Strategic Investment Under Uncertainty: A Synthesis (November 16, 2010). Available at SSRN: https://ssrn.com/abstract=1543763 or http://dx.doi.org/10.2139/ssrn.1543763