Competitive Strategy: Options and Games (MIT Press) by Benoit Chevalier-Roignant

by Benoit Chevalier-Roignant

Corporate managers who face both strategic uncertainty and marketuncertainty confront a classic trade-off between commitment and flexibility. Theycan stake a claim by making a large capital investment today, influencing theirrivals' behavior; or they can take a "wait and see" approach to avoidadverse market consequences tomorrow. In Competitive Strategy, BenoitChevalier-Roignant and Lenos Trigeorgis describe an emerging paradigm that canquantify and balance commitment and flexibility, "option games," by whichthe decision-making approaches of real options and game theory can be combined. Theauthors first discuss prerequisite concepts and tools from basic game theory, industrial organization, and real options analysis, bringing important materials andideas together into a unified framework. They then present the new approach indiscrete time and later in continuous time, beginning with the building blocks ofthe basic ideas and tools and culminating in richer theoretical analyses. Theirpresentation of continuous-time option games is the first systematic coverage of thetopic and fills a significant gap in the existing literature. Competitive Strategyprovides a rigorous yet pragmatic and intuitive approach to strategy formulation. Itsynthesizes research in the areas of strategy, economics, and finance in a way thatis accessible to readers not necessarily expert in the various fields involved. Thebook will be of interest to scholars, students, and academically trained practicingmanagers interested in applying these ideas.

Genres: Economics

Paperback

First published January 1, 2011