This paper derives a preemptive equilibrium in strategic investment in alternative projects. The problem is formulated in a real options model with a multidimensional state variable that represents project-specific uncertainty. The proposed method enables us to evaluate the value of potential...

This study shows that preemptive investment in product proliferation is subject to a commitment problem that is not constrained to models of horizontal product di.erentiation, but applies to vertical product di.erentiation settings as well. We investigate the incentives of firms producing high-...

We investigate how a downstream merger affects input prices and equilibrium profits when there are price interdependencies among firms. To do so, we develop a very simple model where different inputs, provided by monopolist suppliers, may be combined to produce differentiated products sold by...