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Investment under Uncertainty : International Studen - Avinash K. Dixit

Investment under Uncertainty

International Studen

Hardcover Published: 10th January 1994
ISBN: 9780691034102
Number Of Pages: 488

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How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made. In so doing, they answer important questions about investment decisions and the behavior of investment spending.

This new approach to investment recognizes the option value of waiting for better (but never complete) information. It exploits an analogy with the theory of options in financial markets, which permits a much richer dynamic framework than was possible with the traditional theory of investment. The authors present the new theory in a clear and systematic way, and consolidate, synthesize, and extend the various strands of research that have come out of the theory. Their book shows the importance of the theory for understanding investment behavior of firms; develops the implications of this theory for industry dynamics and for government policy concerning investment; and shows how the theory can be applied to specific industries and to a wide variety of business problems.

A New View of Investmentp. 3
Developing the Concepts Through Simple Examplesp. 26
Stochastic Processes and Ito's Lemmap. 59
Dynamic Optimization under Uncertaintyp. 93
Investment Opportunities and Investment Timingp. 135
The Value of a Project and the Decision to Investp. 175
Entry, Exit, Lay-Up, and Scrappingp. 213
Dynamic Equilibrium in a Competitive Industryp. 247
Policy Intervention and Imperfect Competitionp. 282
Sequential Investmentp. 319
Incremental Investment and Capacity Choicep. 357
Applications and Empirical Researchp. 394
Referencesp. 429
Symbol Glossaryp. 445
Author Indexp. 449
Subject Indexp. 455
Table of Contents provided by Publisher. All Rights Reserved.

ISBN: 9780691034102
ISBN-10: 0691034109
Series: International Studen
Audience: Tertiary; University or College
Format: Hardcover
Language: English
Number Of Pages: 488
Published: 10th January 1994
Country of Publication: US
Dimensions (cm): 24.3 x 16.3  x 3.6
Weight (kg): 0.88