This paper considers the investment decision of a firm where it has to decide about the timing and capacity. We obtain that in a fast growing market, right after investment the firm produces below capacity, where the utilization rate (the proportion of capacity that is used for production right...

This paper revisits the important result of the real options approach to investment under uncertainty, which states that increased uncertainty raises the value of waiting and thus decelerates investment.Typically in this literature projects are assumed to be perpetual.However, in today.s economy...

Abstract: This paper considers investment decisions within an uncertain dynamic and competitive framework. Each investment decision involves to determine the timing and the capacity level. In this way we extend the main bulk of the real options theory where the capacity level is given. We...

In this paper we analyze cooperation in R&D in the form of RJVs.We show that the optimal size of an RJV does not only depend on the degree of spillovers, as literature suggests, but also on the cost function of R&D activities.Moreover, the explicit consideration of the fact that R&D projects...

This paper considers an investment timing problem in a duopoly framework. The results of the seminal contribution by Fudenberg en Tirole (1985, RES) are extended by introduction of uncertainty. Three scenarios are identified. In the first scenario we have a preemption equilibrium with dispersed...

In this paper an optimal control model is presented to design enforcement programs minimizing the social costs from both the market and crackdown.By using the maximum principle we show that performing an enforcement policy that leads to a collapse of the drug market is more likely to be optimal...

In standard capital accumulation models all capital goods are equally productive and produce goods of the same quality.However, due to ageing, in reality it holds most of the time that newer capital goods are more productive. Implications of this feature for the firm's investment policies are...