Guo Qiuping
Economic Research Center, Kunming University of Science and Technology, 650093, Kunming, China
Tian Cunzhi
Economic Research Center, Kunming University of Science and Technology, 650093, Kunming, China
Li Jiangqi
School of Geographic and Oceanographic Sciences, 210093, NanJing University, Nanjing, China
ABSTRACT
In this study, we use Shleifer and Vishny (1992) analytical framework and ideas to investigate duopolys resale price of specific assets and the optimal scale of investment in the case of variable investment model with decreasing returns to scale. We show that: (1) the firms resale price of specific assets in distress related to the scale of investment of the another firm with not in distress in industry, (2) the value of collateral and incentive to invest of the firm in distress hinges on whether another firm under consideration is investing. The optimal investment scales of firm depend on other oligopolistic in the industry, (3) in symmetric equilibrium, the optimal investment scales between duopoly is interactive to each other under decreasing returns to scale , the solution of optimal investment scale is a Nash equilibrium.
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How to cite this article
Guo Qiuping, Tian Cunzhi and Li Jiangqi, 2013. Study of Specific Assets
Investment and Resale Price-based on the Perspectives of Decreasing Return to
Scale. Journal of Applied Sciences, 13: 2457-2462.
DOI: 10.3923/jas.2013.2457.2462
URL: https://scialert.net/abstract/?doi=jas.2013.2457.2462
DOI: 10.3923/jas.2013.2457.2462
URL: https://scialert.net/abstract/?doi=jas.2013.2457.2462
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