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

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

doi:10.1016/j.seps.2023.101717

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 Publication › Article › peer-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 language	English
Article number	101717
Journal	Socio-Economic Planning Sciences
Volume	90
DOIs	https://doi.org/10.1016/j.seps.2023.101717
Publication status	Published - 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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10.1016/j.seps.2023.101717

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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.",

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AU - Chen, Shanshan

AU - Wang, Yuhan

AU - Pansera, Bruno Antonio

AU - Luckraz, Shravan

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AB - 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.

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KW - Policy Implications

KW - Real Options

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ER -

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

Abstract

Keywords

ASJC Scopus subject areas

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