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This paper provides a general characterization of subgame-perfect equilibria for a strategic timing problem, where two firms have the (real) option to invest irreversibly in some market. Profit streams are uncertain and depend on the market structure. The analysis of the problem emphasizes its...
Persistent link: https://www.econbiz.de/10011380662
We present a model of firm investment under uncertainty and partial irreversibility in which uncertainty is represented by a jump diffusion. This allows to represent both the continuous Gaussian volatility and the discontinuous uncertainty related to information arrival, sudden changes and large...
Persistent link: https://www.econbiz.de/10011987374
We develop a dynamic model of firm investment under uncertainty that captures firms' risk attitude using quantile preferences. The firm maximizes its present value, defined as current profits and investment plus the discounted value of the τ-quantile of its value next period. In our framework,...
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pollution tax to maximize domestic welfare. We consider the potential implementation of three innovation agreements: cooperative …
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domestic welfare. We consider the potential implementation of three innovation agreements: cooperative research joint venture …
Persistent link: https://www.econbiz.de/10011761649
environmental regulations, the resulting decision by a polluting firm to upgrade its capital stock, and the impact of innovation on … of an unanticipated increase in innovation on the polluting firm's steady state capital stock. Fourth, we analyze the … impact of an anticipated increase in innovation on the polluting firm's steady state capital stock. Finally, we discuss the …
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