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Author : Michele Moretto
Publisher :
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4.:/5 (226 download)
Download or read book Competition and irreversible investments under uncertainty written by Michele Moretto and published by . This book was released on 2003 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Robert K. Dixit
Publisher : Princeton University Press
ISBN 13 : 1400830176
Total Pages : 484 pages
Book Rating : 4.4/5 (8 download)
Download or read book Investment under Uncertainty written by Robert K. Dixit and published by Princeton University Press. This book was released on 2012-07-14 with total page 484 pages. Available in PDF, EPUB and Kindle. Book excerpt: How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made. In so doing, they answer important questions about investment decisions and the behavior of investment spending. This new approach to investment recognizes the option value of waiting for better (but never complete) information. It exploits an analogy with the theory of options in financial markets, which permits a much richer dynamic framework than was possible with the traditional theory of investment. The authors present the new theory in a clear and systematic way, and consolidate, synthesize, and extend the various strands of research that have come out of the theory. Their book shows the importance of the theory for understanding investment behavior of firms; develops the implications of this theory for industry dynamics and for government policy concerning investment; and shows how the theory can be applied to specific industries and to a wide variety of business problems.
Author : Athanasios Episcopos
Publisher :
ISBN 13 :
Total Pages : 288 pages
Book Rating : 4.:/5 (265 download)
Download or read book Irreversible Investment Under Uncertainty, Contigent Claims Analysis, and Competition written by Athanasios Episcopos and published by . This book was released on 1992 with total page 288 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Athanasios Episcopos
Publisher :
ISBN 13 :
Total Pages : 144 pages
Book Rating : 4.:/5 (753 download)
Download or read book Irreversible Investment Under Uncertainty, Contingent Claims Analysis, and Competition written by Athanasios Episcopos and published by . This book was released on 1992 with total page 144 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Raja Patnaik
Publisher :
ISBN 13 :
Total Pages : 83 pages
Book Rating : 4.:/5 (13 download)
Download or read book Competition and the Real Effects of Uncertainty written by Raja Patnaik and published by . This book was released on 2016 with total page 83 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the impact of uncertainty on firm-level capital investment and examines whether this effect depends on the degree of competition that firms face. I exploit a unique empirical setting to construct a time-varying uncertainty measure that is exogenous to economic conditions and firm behavior. I show that higher uncertainty results in a decrease in investment for firms in more concentrated industries. The effect is stronger for firms that face higher costs associated with reversing investments. This finding is in line with irreversible investment models that predict a negative relationship between uncertainty and investment. In contrast, firms in highly competitive industries increase investment in response to higher uncertainty, supporting the argument that competition can erode the option value of deferring investment. In that case, other industry and firm characteristics such as operational flexibility can result in increased investment in response to heightened uncertainty. I also find economically significant effects of uncertainty on other types of investment such as R&D spending, advertising and investment in human capital. Collectively, my results illustrate that the degree of competition plays an important role in the link between uncertainty and investment.
Author : Robert S. Pindyck
Publisher : World Bank Publications
ISBN 13 :
Total Pages : 58 pages
Book Rating : 4./5 ( download)
Download or read book Irreversibility, Uncertainty, and Investment written by Robert S. Pindyck and published by World Bank Publications. This book was released on 1989 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: Irreversible investment is especially sensitive to such risk factors as volatile exchange rates and uncertainty about tariff structures and future cash flows. If the goal of macroeconomic policy is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates.
Author : Eduardo S. Schwartz
Publisher : MIT Press
ISBN 13 : 9780262693189
Total Pages : 890 pages
Book Rating : 4.6/5 (931 download)
Download or read book Real Options and Investment Under Uncertainty written by Eduardo S. Schwartz and published by MIT Press. This book was released on 2004 with total page 890 pages. Available in PDF, EPUB and Kindle. Book excerpt: The study of investment under uncertainty was stagnant for several decades until developments in real options revitalized the field. The topics covered in this book include the reasons behind the under-investment programme.
Author : Robert Stephen Pindyck
Publisher :
ISBN 13 :
Total Pages : 20 pages
Book Rating : 4.:/5 (285 download)
Download or read book A Note on Competitive Investment Under Uncertainty written by Robert Stephen Pindyck and published by . This book was released on 1991 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper clarifies how uncertainty affects irreversible investment in a competitive market equilibrium. With free entry, irreversibility affects the distribution of future prices, and thereby creates an opportunity cost of investing now rather than waiting. As with an imperfectly competitive firm, uncertainty can also increase the value of a marginal unit of capital. I show that with an infinite horizon, the opportunity cost is larger than this increase in value, so that uncertainty reduces investment.
Author : Robert Lensink
Publisher : Edward Elgar Publishing
ISBN 13 : 9781782541240
Total Pages : 176 pages
Book Rating : 4.5/5 (412 download)
Download or read book Investment, Capital Market Imperfections, and Uncertainty written by Robert Lensink and published by Edward Elgar Publishing. This book was released on 2001-01-01 with total page 176 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents an up-to-date overview of the theory as well as the empirics of the relationship between investment, financial imperfections and uncertainty. After reviewing the capital market imperfections literature and the empirical results, the authors discuss both traditional investment models with uncertainty and the more modern option based models. They present an overview of empirical results of the modelling of investment under uncertainty. In these examples the effects of capital market imperfections on investment are carefully considered. The authors conclude that there is overwhelming empirical support for a negative uncertainty-investment relationship. This book should appeal to academics with an interest in investment theory, professionals in the financial sector and students of macroeconomics and finance. "Investment, Capital Market Imperfections, and Uncertainty" assumes only a basic knowledge of mathematics and is easily accessible.
Author : Evrim Akdogu
Publisher :
ISBN 13 :
Total Pages : 53 pages
Book Rating : 4.:/5 (129 download)
Download or read book Investment and Competition written by Evrim Akdogu and published by . This book was released on 2006 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines how industry structure affects corporate investment patterns. Real-options theory shows that deferring irreversible investment in the face of uncertainty is valuable. Theory also shows that the value of waiting to invest falls if investment opportunities are contestable. Consistent with these theories, we find that firms in monopolistic industries exhibit lower investment-q sensitivity and are slower to invest than firms in competitive industries. However, we find that investment-q sensitivity and investment speed are highest in oligopolistic industries, suggesting that the value of investing strategically can outweigh the value of waiting. Indeed, oligopolistic industries experience less entry and more exit than other industries.
Author : Pauli Murto
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)
Download or read book A Game Model of Irreversible Investment Under Uncertainty written by Pauli Murto and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Most of the literature on real options considers the optimal decision of a firm in isolation from competitors. In reality, however, the actions of competing firms often affect each other's investment opportunities. We develop a game model where many firms compete for a single investment opportunity. When one of the firms triggers the investment the opportunity is completely lost for the other firms. The value of the project for the firms is assumed to follow a geometric Brownian motion. The model combines game theory and the theory of irreversible investment under uncertainty. We characterize the resulting Nash equilibrium under different assumptions on the information that the firms have about each other's valuations for the project. As an example, we present a case of building a telecommunications network.
Author : J.H.H Thijssen
Publisher : Springer Science & Business Media
ISBN 13 : 1402079443
Total Pages : 255 pages
Book Rating : 4.4/5 (2 download)
Download or read book Investment under Uncertainty, Coalition Spillovers and Market Evolution in a Game Theoretic Perspective written by J.H.H Thijssen and published by Springer Science & Business Media. This book was released on 2006-04-11 with total page 255 pages. Available in PDF, EPUB and Kindle. Book excerpt: Two crucial aspects of economic reality are uncertainty and dynamics. In this book, new models and techniques are developed to analyse economic dynamics in an uncertain environment. In the first part, investment decisions of firms are analysed in a framework where imperfect information regarding the investment's profitability is obtained randomly over time. In the second part, a new class of cooperative games, spillover games, is developed and applied to a particular investment problem under uncertainty: mergers. In the third part, the effect of bounded rationality on market evolution is analysed for oligopolistic competition and incomplete financial markets.
Author : Ricardo J. Caballero
Publisher :
ISBN 13 :
Total Pages : 26 pages
Book Rating : 4.:/5 (221 download)
Download or read book Uncertainty, Investment, and Industry Evolution written by Ricardo J. Caballero and published by . This book was released on 1992 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effects of aggregate and idiosyncratic uncertainty on the entry of firms, total investment, and prices in a competitive industry with irreversible investment. We first use standard dynamic programming methods to determine firms' entry decisions, and we describe the resulting industry equilibrium and its characteristics, emphasizing the effects of different sources of uncertainty. We then show how the conditional distribution of prices can be used as an alternative means of determining and understanding the behavior of firms and the resulting industry equilibrium. Finally, we use four-digit U.S. manufacturing data to examine some implications of the model.
Author : Robin Mason
Publisher :
ISBN 13 :
Total Pages : 48 pages
Book Rating : 4.X/5 (6 download)
Download or read book Irreversible Investment with Strategic Interactions written by Robin Mason and published by . This book was released on 2001 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Michael J. Brennan
Publisher : Oxford University Press, USA
ISBN 13 : 9780195112696
Total Pages : 357 pages
Book Rating : 4.1/5 (126 download)
Download or read book Project Flexibility, Agency, and Competition written by Michael J. Brennan and published by Oxford University Press, USA. This book was released on 1999 with total page 357 pages. Available in PDF, EPUB and Kindle. Book excerpt: While most approaches to capital budgeting have used discounted cash flow valuation techniques, recent attention has been given to the valuation of "real options" to look at capital budgeting decisions and project management. Real options are a measure of the value of managerial flexibility and strategic value in capital investment. Because this topic is important but not yet covered adequately, "Innovation, Infrastructure and Strategic Options" fills a major gap in the market. This text deals with issues of R & D and technology options, investments involving learning, infrastructure, competition, strategy, and growth options.
Author : Robert Novy-Marx
Publisher :
ISBN 13 :
Total Pages : 282 pages
Book Rating : 4.:/5 (34 download)
Download or read book Investment Under Uncertainty in Equilibrium written by Robert Novy-Marx and published by . This book was released on 2003 with total page 282 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Fridrik Mar Baldursson
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Irreversible Investment and Industry Equilibrium written by Fridrik Mar Baldursson and published by . This book was released on 1998 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We establish the equivalence of competitive industry equilibrium with a central planner's decision problem under uncertainty, when investment is irreversible. The existence of industry equilibrium is derived, and it is shown that myopic behavior on the part of small agents is harmless, in the sense that it leads to the same decisions as full rational expectations do. Our model is set in continuous time and allows for very general forms of randomness. The methods are based on the probabilistic approach to singular stochastic control theory and its connections with optimal stopping problems.
