Real options and the Jorgensonian user cost of capital

Dixit and Pindyck (1994) claim that the Jorgensonian rule of investment (Jorgenson, 1963) does not hold in uncertain settings. This note shows that the validity of that claim depends crucially on the particular process chosen to describe the economic uncertainty. In fact, the Jorgensonian rule of investment holds in other real options models.

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Year of publication:	2005
Authors:	Gutiérrez, Oscar
Published in:	Investigaciones Economicas. - Fundación SEPI. - Vol. 29.2005, 3, p. 625-630
Publisher:	Fundación SEPI
Subject:	Real options \| user cost of capital \| free-boundary \| gamma process

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Extent:	application/pdf
Type of publication:	Article
Language:	English
Notes:	Published
Classification:	D92 - Intertemporal Firm Choice and Growth, Investment, or Financing ; G31 - Capital Budgeting; Investment Policy
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005690134