This paper provides an explanation for why the sunk cost bias persists among firms in a competitive environment in which rich learning possibilities are allowed. We envision firms that experiment with cost methodologies that are consistent with real-world accounting practices, including ones...

Conventional (single-prior) Bayesian games of incomplete information are limited in their ability to capture the extent of informational asymmetry. In particular, they are not capable of representing complete ignorance of an uninformed player about an unknown parameter of the environment. Using...

Capacity addition and withdrawal decisions are among the most important strategic decisions made by firms in oligopolistic industries. In this paper, we develop and analyze a fully dynamic model of an oligopolistic industry with lumpy capacity and lumpy investment/disinvestment. We use our model...

Learning-by-doing and organizational forgetting have been shown to be important in a variety of industrial settings. This paper provides a general model of dynamic competition that accounts for these economic fundamentals and shows how they shape industry structure and dynamics. Previously...

Predatory pricing - a deliberate strategy of pricing aggressively in order to eliminate competitors - is one of the more contentious areas of antitrust policy and its existence and efficacy are widely debated. The purpose of this paper is to formally characterizes predatory pricing in a modern...

Predatory pricing . a deliberate strategy of pricing aggressively in order to eliminate competitors . is one of the more contentious areas of antitrust policy. This paper uses a modern industry dynamics framework to characterize predatory pricing by isolating a Firm’s equilibrium predatory...

Capacity addition and withdrawal decisions are among the most important strategic decisions made by firms in oligopolistic industries. In this paper, we develop and analyze a fully dynamic model of an oligopolistic industry with lumpy capacity and lumpy investment/disinvestment. We use our model...

We study industries where the price that a firm sets serves as an investment into lower cost or higher demand. We assess the welfare implications of the ensuing competition for the market using analytical and numerical approaches to compare the equilibria of a learning-by-doing model to the...

Learning-by-doing and organizational forgetting have been shown to be important in a variety of industrial settings. This paper provides a general model of dynamic competition that accounts for these economic fundamentals and shows how they shape industry structure and dynamics. Previously...

We model the interaction between a profi t-maximizing firm and an activist using an in nite-horizon dynamic stochastic game. The fi rm enhances its reputation through self-regulation : voluntary provision of an activity that reduces a negative externality. We show that in equilibrium the...