'Reverse Hysteresis': R&D Investment with Stochastic Innovation.

We consider optimal investment behavior for a firm facing both technological and economic uncertainty, in the context of a research project with unpredictable outcomes. The optimal investment strategy, in the form of a pair of trigger points for investment and abandonment, is derived. As in Dixit (1989), the investment trigger exceeds the Marshallian investment point.

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Year of publication:	1999
Authors:	Weeds, H.
Institutions:	Department of Economics, University of Warwick
Subject:	RESEARCH AND DEVELOPMENT \| INVESTMENTS \| BEHAVIOUR

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Series:	The Warwick Economics Research Paper Series (TWERPS).
Type of publication:	Book / Working Paper
Language:	English
Notes:	21 pages
Classification:	C61 - Optimization Techniques; Programming Models; Dynamic Analysis ; D81 - Criteria for Decision-Making under Risk and Uncertainty ; E22 - Capital; Investment (including Inventories); Capacity ; O31 - Innovation and Invention: Processes and Incentives
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005368588