The relationship between uncertainty and managerial flexibility is particularly crucial in addressing capital projects. We consider a firm that can invest in a project in either a single (lumpy investment) or multiple stages (stepwise investment) under price uncertainty and has discretion over...

Our paper contributes to the literature of technology adoption. In most of these models it is assumed that the intensity rate of new arrivals is constant. We extend this approach by assuming that after the last technology jump the intensity of a new arrival can change. Right after the arrival of...

This paper studies investments in new markets where more than two (anticipated) identical competitors are present. In case of three firms an accordion effect is detected: an exogenous demand shock results in a change of the wedge between investment thresholds of the first and second investor...

Empirical studies stress the significance of financing constraints in business investment. Especially high tech investment is likely to be affected by capital market imperfections. The reason is that their returns are highly uncertain so that it is difficult to get outside finance for this kind...

Since the end of the seventies Skiba points have been studied in infinite time optimal control problems with multiple steady states. At such a Skiba point the decision maker is indifferent between choosing trajectories that approach different steady states. This paper extends this theory towards...

This paper analyzes a semicollusive, differentiated duopoly. Firms first compete in cost reducing R&D and then cooperate on the output market. The sharing of the joint profit on the output market is modeled as a Nash bargaining game. We study an asymmetric setting in which one firm has a lower...

We study optimal investment in technologies characterized by the learning curve. There are two investment patterns depending on the shape of the learning curve. If the learning process is slow, firms invest relatively late and on a larger scale. If the curve is steep, firms invest earlier and on...

Software can be distributed closed source (proprietary) or open source (developed collaboratively). While a firm cannot sell open source software, and so loses potential sales revenue, the open source software development process can have a substantial positive impact on the quality of a...

We present a novel model of corruption dynamics in the form of a nonlinear optimal dynamic control problem. It has a tipping point, but one whose origins and character are distinct from that in the classic Schelling (1978) model. The decision maker choosing a level of corruption is the chief or...