Open Access. Powered by Scholars. Published by Universities.®
- Discipline
- Keyword
Articles 1 - 3 of 3
Full-Text Articles in Other Business
A Dynamic Model Of Competitive Entry Response, Matthew Selove
A Dynamic Model Of Competitive Entry Response, Matthew Selove
Business Faculty Articles and Research
I develop a dynamic investment game with a “memoryless” research and development process in which an incumbent and an entrant can invest in a new technology, and the entrant can also invest in the old technology. I show that an increase in the probability of successfully implementing a technology can cause the incumbent to reduce its investment. Under certain conditions, if the success probability is high, the incumbent allows the entrant to win the new technology so that firms reach an equilibrium in which they use different technologies, and threats of retaliation prevent attacks; but if the success probability is …
How Do Firms Become Different? A Dynamic Model, Matthew Selove
How Do Firms Become Different? A Dynamic Model, Matthew Selove
Business Faculty Articles and Research
This paper presents a dynamic investment game in which firms that are initially identical develop assets that are specialized to different market segments. The model assumes that there are increasing returns to investment in a segment, for example, as a result of word-of-mouth or learning curve effects. I derive three key results: (1) Under certain conditions there is a unique equilibrium in which firms that are only slightly different focus all of their investment in different segments, causing small random differences to expand into large permanent differences. (2) If, on the other hand, sufficiently large random shocks are possible, firms …
Innovators And Imitators In Product-Market Competition And Accounting Reporting, Carlos Corona, Lin Nan, Ran Zhao
Innovators And Imitators In Product-Market Competition And Accounting Reporting, Carlos Corona, Lin Nan, Ran Zhao
Accounting Faculty Articles and Research
In this study, we examine firms’ investments in explorative initiatives and their choices of capitalization method in a product-market competition setting. Since the capitalization of exploration expenditures may contain information on whether a firm’s exploration investment is successful, financial reports may reveal important information to competitors, and thus may have real consequences in product-market competition. In our paper, we identify two driving forces that induce firms to choose different capitalization methods: an information-spillover effect and a preempting effect. We also find that enforcing an accounting method that requires firms to capitalize expenditures of only successful explorations may increase or decrease …