Chapter 6

Strategic Investment Decisions in a Continuous- Time Dynamic Model with Complementary Goods

Kazuhiro Ohnishi

Abstract

This chapter considers a continuous-time infinite-horizon duopoly model with complementary products. The chapter investigates the optimal level of labour investment by duopoly firms in a new complementary product industry. Based on the analysis of the model, it is shown that there exist multiple perfect equilibrium outcomes where both firms invest beyond their steady-state reaction curves.

Total Pages: 88-97 (10)

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