Hd28 .m414 -n Working Paper Alfred P. Sloan School of Management a Continuous Time Formation Entry and Exit: * a Continuous Time Formation Entry and Exit: a Continuous Time Formulation*
نویسنده
چکیده
We study a class of continuous time optimal entry-exit decisions under uncertainty for a single firm and for a duopoly. Under very general hypotheses, the optimal policy for a single firm exists and is unique. This unique optimal policy is a barrier policy: A firm optimally enters or exits from an industry when the demand reaches certain barriers. In the context of a duopoly, there may exist multiple subgame perfect equilibria. We demonstrate how to identify a subgame perfect equilibrium in which both firms employ stationary barrier policies. In some of these stationary equilibria, a firm may exit even when the demand has been rising on the average. aeMSt "M.LT. UBRAHIES JUN 3 19921 'We thank David Kreps (the former co-editor) and Andreu Mas-Colell (the editor), Jean-Francois Mertens, and Berry Nalebuff for many insightful comments and suggestions and an anonymous referee for providing a much shorter proof for a proposition. 'MIT Sloan School of Management, Cambridge, MA 02139. 'Yale School of Organization and Management, Box lA, New Haven, CT 06525.
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