Innovation, Competition, and Investment Timing
| Autor: | Jøril Mæland, Yrjö Koskinen |
|---|---|
| Rok vydání: | 2016 |
| Předmět: |
Economics and Econometrics
Investment timing media_common.quotation_subject jel:D82 Adverse selection jel:D44 ComputerApplications_COMPUTERSINOTHERSYSTEMS jel:G24 Microeconomics Competition (economics) 0502 economics and business Agency (sociology) Common value auction 050207 economics Business and International Management Industrial organization Innovation competition media_common 050208 finance 05 social sciences Economic rent Reservation jel:G31 Investment (macroeconomics) jel:O31 Incentive jel:O32 ComputingMilieux_COMPUTERSANDSOCIETY Agency costs Auctions Innovation Real options Business Finance |
| Zdroj: | The Review of Corporate Finance Studies. 5:166-199 |
| ISSN: | 2046-9136 2046-9128 |
| DOI: | 10.1093/rcfs/cfw002 |
| Popis: | In our model multiple innovators compete against each other by submitting investment proposals to an investor. The investor chooses the least expensive proposal and the timing of the investment. Innovators have to provide costly, but observable effort and they learn privately the cost of investing. The investor has to compensate the innovators for their effort costs, but competition helps to erode innovators' informational rents. Consequently, competition leads to faster innovation, because the investor has less need to delay expensive investments. With endogenous number of innovators investment timing becomes first-best. When we introduce private benefits for winning the competition, innovators have an incentive to understate the investment costs. When private benefits are large the investor may have to counter this by delaying the timing of inexpensive investments. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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