Dynamic Competition

Chapter

Abstract

Looking at rival firms, this chapter simulates real-life cases and feasible outcomes from competing strategies under different scenarios. Two aspects of competitive dynamics are presented and compared under coal- and gas-based power systems. The influence of the firms’ initial endowments on outcomes and the technological obsolescence risks are made apparent through technological substitutions. The simulations throw up a number of counter-intuitive insights that contradict the accepted wisdom of NPV. Prominent among these insights is the learning curve paradox for photovoltaic (PV) and solar power. As equipment costs are expected to significantly fall with an increasing number of installations, firms are encouraged to defer rather than to commit early, as value is potentially enhanced by waiting.

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Copyright information

© The Author(s) 2017

Authors and Affiliations

  1. 1.IESE Business SchoolUniversity of NavarraBarcelonaSpain

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