Co-investment deterrence

The Role of Investment in Entry-Deterrence

Optimal policy commitment: investment deterrence versus option value

The consistency and predictability of regulation is thought to be highly important for costly investment decisions. When the government lacks commitment power to maintain a promised policy, and firms are not perfectly competitive, investment levels are typically lower than when the government can commit. However, flexibility in policymaking is beneficial in that it allows for adjustment when co...

Optimal co-investment in supply chain infrastructure

This paper considers co-investment in a supply chain infrastructure using an inter-temporal model. We assume that firms’ capital is essentially the supply chain’s infrastructure. As a result, firms’ policies consist in selecting an optimal level of employment as well as the level of co-investment in the supply chain infrastructure. Several applications and examples are presented and open-loop, ...

Residual Deterrence ∗

Successes of law enforcement in apprehending offenders are often publicized events. Such events have been found to result in temporary reductions in offending, or “residual deterrence”. We provide a theory of residual deterrence which accounts for the incentives of both enforcement officials and potential offenders. Our theory rests on the costs of reallocating enforcement resources. In light o...

Bid deterrence

In a second-price auction with costly bidding, bidders can deter others from participating by publicly pre-committing to bid. Such “bid deterrence” increases total welfare when the reserve price is given, but allows the seller to increase expected revenue when the seller can pre-commit to a reserve price. JEL Codes: D44.