How Risk Disciplines Pre-commitment

Abstract : This paper studies the entry strategies of firms on risky markets. We focus on markets where demand is affine and cost is linear, moreover, the demand includes a normally distributed random variable. In such a model, we show that the leader's strategy changes with the level of market risk even when firms are risk neutral. Therefore, the availability of future information for a Stackelberg follower has a feedback effect on the leader's strategy. We also show that compared with traditional markets with no risk, the basic trade-off between flexibility and pre-commitment is only slightly changed in the qualitative game where firms are free to choose when to enter the market.
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Article dans une revue
Theory and Decision, Springer Verlag, 2008, 65 (3), pp.205-226
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Contributeur : Thierry Lafay <>
Soumis le : vendredi 24 mai 2013 - 20:14:09
Dernière modification le : samedi 25 mai 2013 - 20:01:27

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  • HAL Id : hal-00825882, version 1

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Christophe Caron, Thierry Lafay. How Risk Disciplines Pre-commitment. Theory and Decision, Springer Verlag, 2008, 65 (3), pp.205-226. 〈hal-00825882〉

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