Learning and investment under demand uncertainty in container shipping

This paper investigates how firms invest under demand uncertainty focusing on the role of information in container shipping. I develop and estimate a dynamic oligopoly model that allows uncertainty about the demand process in addition to uncertainty about demand realizations: agents do not know the true parameters in the demand process, but form and revise their expectations based on information available at each decision-making moment. I find that the uncertainty about the demand process amplifies investment cycles through (i) leading firms to update beliefs more often and drastically as they experience demand volatility, and (ii) intensifying strategic incentives among firms.