Value of Waiting and Excess Entry Theorem
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Date
2016-04
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Scientific Research
Abstract
By reformulating the Cournot model by making use of the optimal stopping theory, we reconsider
the excess entry theorem for a stochastic market. It is revealed that: 1) free entry in a stochastic
oligopolistic market is socially excessive, owing not only to the presence of scale economies but
also to the value of waiting; 2) welfare maximizing number of the entrants is larger if the market is
more uncertain.
Description
Keywords
Excess Entry Theorem, Cournot Competition, Optimal Stopping Theory, Geometric Brownian Motion, Value of Waiting
Citation
Theoretical Economics Letters, 2016, 6, 208-213