An Analysis of Enterprise Investment Decision Based on Cournot-Nash Equilibrium

Cournot-Nash equilibrium is introduced into the traditional options game model, and the manifestation of this model under the condition is studied. Besides, a numerical method is used for solving investment values and thresholds of the leader enterprise and the follower enterprise. The results showe...

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Bibliographic Details
Published inApplied Mechanics and Materials Vol. 40-41; pp. 497 - 505
Main Authors Chai, Hua Qi, Luo, Shu Juan, Song, De Qiang
Format Journal Article
LanguageEnglish
Published Zurich Trans Tech Publications Ltd 01.01.2011
Subjects
Follower
Cournot-Nash Equilibrium
Leader
Options Game
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Summary:Cournot-Nash equilibrium is introduced into the traditional options game model, and the manifestation of this model under the condition is studied. Besides, a numerical method is used for solving investment values and thresholds of the leader enterprise and the follower enterprise. The results showed that both enterprises still have determined investment thresholds under Cournot-Nash equilibrium. In contrast, the follower enterprise investment threshold has a higher sensitivity to its own factors, but its present investment value is less subject to its own threshold and market demand; the leader enterprise performs contrary to the follower. Comparative advantages of marginal operating costs and investment sunk costs determine enterprise roles.
Bibliography:Selected, peer reviewed papers from the 2010 Wase Global Congress on Science Engineering, Yantai, China, November 27-28, 2010
ISBN:9780878492121
0878492127
ISSN:1660-9336
1662-7482
1662-7482
DOI:10.4028/www.scientific.net/AMM.40-41.497