A Study of Real Estate Investment Timing under Asymmetric Duopoly

摘要

The optimal timing analysis of the land development is not only an important topic for real estate firms, but also the focus of the application of option-game theory. This paper constructs a continuous time option game model under asymmetrical duopoly by assuming that different competitive strengths exits between duopoly due to differentiated real estate products, and deduces the equilibrium strategies of asymmetrical duopoly. Thus, sequential strategy equilibrium or instantaneous strategy equilibrium is achieved. But which strategy the firm will employ depends on the different conditions of current demand shock level and the comparative competitive strengths between duopoly. This paper builds three distinctions compared to the models in previous researches. First, the asymmetry between two developers is shown in product quality, and then this paper constructs a differentiated duopoly price competition model. Besides, project value is calculates by a limited time periods cash flow model.