Analysis and algorithm for the optimal investment times of new manufacturing technologies in a duopoly

On the basis of a dynamic and non-cooperative game-theoretic model, the optimal timings of investments in new manufacturing technologies (NMT) is analysed under duopolistic competition. Non-identical incumbents with time-proportional demand always wait for some delay to invest in NMT. The existence of silent timing equilibrium is addressed subsequently. We show that cost-reducing NMT diffuse over time within a duopoly. The investments in strategic NMT, however, may be distributed through time or in a ‘swarm’. Economic interpretations of initial options and the comparative statics presented in this paper help decision makers develop strategies and make decisions under the situation they face. Finally, a computational algorithm of optimal timings could verify this analysis and facilitate the real applications of game-theoretic models.