On the welfare and policy implications of a two-period real option game

Congcong Wang, Shanshan Chen, Yuhan Wang, Bruno Antonio Pansera, Shravan Luckraz

Research output: Journal PublicationArticlepeer-review

1 Citation (Scopus)

Abstract

We consider investment decisions in a discrete time, two-stage real option game where firms move sequentially, in the context of a Public-Private Partnership (PPP) problem. The value of the option depends on the market structure which we assume to be either a monopoly or a Bertrand differentiated duopoly. We show that, in an equilibrium where no firm invests in the first period, a government intervention, in form of a subsidy, can improve the welfare level.

Original languageEnglish
Article number101717
JournalSocio-Economic Planning Sciences
Volume90
DOIs
Publication statusPublished - Dec 2023

Keywords

  • Common goods
  • Decision
  • Policy Implications
  • Real Options

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Economics and Econometrics
  • Strategy and Management
  • Statistics, Probability and Uncertainty
  • Management Science and Operations Research

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