Market segmentation under uncertainty
نویسنده
چکیده
This paper proposes a general model to value different strategies to enter a market, comparing alternative sequential segmentation paths to simultaneous investment in all segments. This general model also allows demand to evolve accordingly to an endogenous regimeswitching process, under which it can behave differently before and after investment. It is shown how uncertainty, revenues and investment costs of each segment impact the choice between sequential or parallel investment, as well as the optimal path. The model also offers some insights for the valuation of growth options.
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