Moretto, Michele; Dosi, Cesare - Fondazione ENI Enrico Mattei (FEEM) - 2010
use or lose ("UOL") provisions upon the private time of investment. We find that the risk of losing the licence because of … inaction generally increases the probability of early investment. However, when capital costs are expected to decline over time …, UOL provisions may involve a "perverse effect", by increasing, rather than reducing, the expected time of investment, with …