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Competitive StrategyOptions and Games$
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Benoît Chevalier-Roignant and Lenos Trigeorgis

Print publication date: 2011

Print ISBN-13: 9780262015998

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262015998.001.0001

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Leadership and Early-Mover Advantage

Leadership and Early-Mover Advantage

(p.331) 11 Leadership and Early-Mover Advantage
Competitive Strategy

Benoît Chevalier-Roignant

Lenos Trigeorgis

The MIT Press

This chapter shows how the pure-strategy Nash equilibria in investment games can exhibit a sequencing of investment timing. The chapter is organized as follows. Section 11.1 discusses the basic deterministic game-theoretic framework of Reinganum (1981) that shows why sequential, rather than simultaneous, investment emerges as the equilibrium when duopolist firms hold a shared investment option. Sections 11.2 and 11.3 consider the option to invest in a duopoly and in an oligopoly setting, respectively. Section 11.4 deals with the option to expand production capacity. Such investment-timing games can help explain firm leadership and early-mover advantage.

Keywords:   competitive advantage, investment timing game, sequential investment, duopoly, oligopoly, capacity expansion

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