Dixit, Avinash; Pindyck, Robert S; Sodal, Sigbjorn - In: Economic Journal 109 (1999) 455, pp. 179-89
The authors reexamine 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; they show that this trade-off is closely analogous to the...