 | Welcome to my website! I am a post-doctoral researcher at Stellenbosch University. I graduated from Paris School of Economics and the University Paris 1 Panthéon Sorbonne in June 2016. My research interests lie in dynamic industrial organization, competition policy, international trade, and environmental economics. |
PhD Disssertation Abstract
My thesis studies the role of the irreversibility of investment on the dynamic imperfect competition. It is composed of five chapters: a general introduction and four theoretical articles.
The second chapter focuses on the role of demand evolution on the possibility of preemption under irreversible investment under imperfect competition. It shows there is no possibility of preemption when there is no jump of demand. Indeed, the linearity of investment cost creates no incentive for the firms to delay investment. When there is no demand evolution, this prevents preemption.
The third chapter studies the dynamics of firms' capacity when the irreversibility of investment is partial. It shows that the investment dynamics exhibits an efficiency property, and that some initial asymmetry in capacity can be preserved in the short run, but disappears in the long run.
The fourth chapter considers the investment choice of firms when there are two different productive capacities embodying different types of technology. One technology permits to produce at a lower marginal cost but the purchasing price of the capacity using this technology is higher. Due to the presence of a financial constraint, firms use different technologies at the same time, and a preemption equilibrium appears. Finally, this paper presents a counter-intuitive policy result: an increase in the price of one of the capacities may increase its utilization.
The last chapter studies the impact of the irreversibility of investment on collusion possibility. The irreversibility of investment reduces the profitability of short run deviation, as the deviating firm has to invest in order to increase its capacity, and it creates a long run effect. Indeed, once the deviating firm has invested, it is committed to its new capacity. The deviation may thus lead to a preemption of the punishing firm. This preemption effect can make collusion harder to sustain for more patient firms.