This paper investigates the impact of technical progress on the relationship between competition an investment. Using a …, I find that technical progress, which increases the impact of investment on cost reduction, decreases the level of … competition that maximizes investment of the industry. This feature holds also for consumer surplus and Welfare. In the model …

We study optimal investment in technologies characterized by the learning curve. There are two investment patterns … scale. If the curve is steep, firms invest earlier and on a smaller scale. We further demonstrate that learning investment … differs greatly from investment in technologies without learning effects. Learning investments generate substantial initial …

This paper analyzes the behavior of a firm that chooses both the scale and timing of its investment. Sensitivity … is in contrast to the conventional wisdom, which is that greater volatility leads to investment in smaller increments … investment is a decreasing function of demand volatility. The timing and scale of investment are most sensitive to volatility …

Uncertainty appears to vary strongly over time, temporarily rising by up to 200% around major shocks like the Cuban … Missile crisis, the assassination of JFK and 9/11. This paper offers the first structural framework to analyze uncertainty …. The parameterized model is then used to simulate a macro uncertainty shock, which produces a rapid drop and rebound in …

We provide theoretical and empirical evidence that policy uncertainty can significantly affect firm level investment … and entry decisions in the context of international trade. When market entry costs are sunk, policy uncertainty can create … a real option value of waiting to enter foreign markets until conditions improve or uncertainty is resolved. Using a …

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 … that investment projects are usually considered to have a .nite life.The present paper studies investment projects with …

investment. Uncertainty increases real option values making firms more cautious when investing or disinvesting. This is confirmed … both numerically for a model with a rich mix of adjustment costs, time-varying uncertainty, and aggregation over investment …This paper shows that, with (partial) irreversibility, higher uncertainty reduces the impact effect of demand shocks on …

This paper investigates the relationship between infation uncertainty and investment using a panel of loan-level data … models of investment under uncertainty. … aggregates. The data show that periods of increased inflation uncertainty are associated with substantial reductions in total …

We derive robust predictions on the effects of uncertainty on short run investment dynamics in a broad class of models … of the capital stock is ambiguous. An investment model is estimated to test these theoretical predictions using a panel … of UK firms and a stock returns-based measure of uncertainty. As predicted we find that uncertainty reduces firms …

The real options tradition originally predicted a decreasing relationship between uncertainty and investment, through … the positive effect of higher uncertainty on the trigger level for revenue relative to costs. An opposing effect on the … probability is not the best measure of investment. The sign of the total effect is again ambiguous. This ambiguity is illustrated …