We analyze the effect of external financing and associated bankruptcy threat on the speed of product innovation in a market characterized by technological and demand uncertainty. In a dynamic market setting we characterize the optimal R&D investment strategy of a monopolistic incumbent firm that...

In a dynamic model of a risk-neutral competitive firm which can lower its pollution emissions per unit of output by building up abatement capital stock, we examine the effect of a higher pollution tax rate on abatement investment both under full certainty and when the timing or the size of the...

This paper considers investment problems in real options with non-homogeneous two-factor uncertainty. It shows that, despite claims made in the literature, the method used to derive an analytical solution in one dimensional problems cannot be straightforwardly extended to problems with two...