Strategic Investment Under Uncertainty: A Synthesis
38 Pages Posted: 29 Jan 2010 Last revised: 24 Jun 2012
Date Written: November 16, 2010
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