Cost-saving joint venture under uncertainty

David W.K. Yeung, Leon A. Petrosyan

Research output: Chapter in Book/Report/Conference proceedingChapterResearchpeer-review

Abstract

In this chapter, we consider a cost-saving joint venture in the presence of stochastic elements. Section 9.1 formulates a dynamic cost-saving corporate joint venture in a stochastic environment and characterizes its subgame consistent solutions. An explicitly solvable illustration is given in Sect. 9.2. A characterization of the Shapley Value solution to a stochastic cost-saving joint venture is presented in Sect. 9.3 and a payoff distribution procedure leading to a subgame consistent solution is computed. Extensions to infinite-horizon ventures are formulated with explicit illustrations in the subsequent two sections.

Original languageEnglish
Title of host publicationStatic and Dynamic Game Theory
Subtitle of host publicationFoundations and Applications
PublisherBirkhäuser Verlag AG
Pages239-270
Number of pages32
ISBN (Print)9780817682613
DOIs
StatePublished - 1 Jan 2012

Publication series

NameStatic and Dynamic Game Theory: Foundations and Applications
ISSN (Print)2363-8516
ISSN (Electronic)2363-8524

Scopus subject areas

  • Statistics, Probability and Uncertainty
  • Statistics and Probability
  • Applied Mathematics

Keywords

  • Expected profit
  • Grand coalition
  • Joint venture
  • Stochastic control problem
  • Technical appendix

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