Strategic capacity expansion under a potential entry threat

研究成果: Article査読

1 被引用数 (Scopus)

抄録

This paper examines strategic investment decisions on capacity expansion in the presence of a potential entry threat. The model derives an equilibrium investment strategy on expansion thresholds and scales and evaluates the strategic value of the capacity expansion. It demonstrates that an incumbent firm expands its production capacity by strategic incentive to deter a potential competitor's market entry and prolong its period of monopoly. The results suggest that the strategic value of the expansion is high enough to induce the incumbent firm to undertake the capacity expansion that generates negative cash flows in the future as a stand-alone project.

本文言語English
ページ(範囲)157-177
ページ数21
ジャーナルInternational Review of Economics and Finance
38
DOI
出版ステータスPublished - 2015 7月 1
外部発表はい

ASJC Scopus subject areas

  • 財務
  • 経済学、計量経済学

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