I study irreversible investment decisions when projects take time to complete, and are subject to two types of …, and materials that will ultimately be required to complete the project, and that is only resolved as the investment … required, and which is external to the firm's investment activity. I derive a simple decision rule that maximizes the firm …

We re-examine the basic investment problem of deciding when to incur a sunk cost to obtain a stochastically fluctuating … benefit. The optimal investment rule satisfies a trade-off between a larger versus a later net benefit; we show that this … demand curve. We reinterpret the optimal investment rule as a markup formula involving an elasticity that has exactly the …

A recent literature suggests that because investment expenditures are irreversible and can be delayed, they may be … aggregate investment. We find that the volatility of the marginal profitability of capital - a summary measure of uncertainty … - affects investment as the theory suggests, but the size of the effect is moderate, and is greatest for developing countries …

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 …

This paper addresses the impact on investment incentives of the network sharing arrangements mandated by the … Telecommunications Act of 1996, with a focus on the implications of irreversible investment. Although the goal is to promote competition … sunk costs, this leads to an asymmetric allocation of risk and return that is not properly accounted for in the pricing of …