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| Author: | Asplund, M. |
| Title: | Risk-averse firms in oligopoly |
| Journal: | International Journal of Industrial Organization
2002 : SEP, VOL. 20:7, p. 995-1012 |
| Index terms: | Oligopoly Risk Investment appraisal Fixed costs |
| Language: | eng |
| Abstract: | The paper provides a framework that accommodates a wide range of alternative assumptions regardÃng the nature of competition and types of uncertainty. It shows how risk aversion influences firms' best-response strategies. Only in the case of marginal cost uncertainty does higher risk aversion make competition unambiguously softer. The risk-averse best response strategies depend on the level of fixed costs. This fact is used to analyse strategic investment in capacity and the importance of accumulated profits. |
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