Brito, Jose Brandao de; Sampayo, Felipa de Mello - In: Applied Economics 37 (2005) 4, pp. 417-437
An 'option-pricing' model is employed to analyse the timing of FDI. Assuming that the firm's profits are determined by the attractiveness of both the home and foreign countries, and that attractiveness follows a Brownian motion, an optimal trigger value of FDI is derived. The model shows that,...
