A Markup Interpretation Of Optimal Investment Rules  

Oleh:

Dixit, Avinash ; Pindyck, Robert S. ; Sudal, Sigbjurn

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 109 no. 455 (Apr. 1999), page 179-189.
Topik: Investment rules; interpretation
Fulltext: 179.pdf (268.02KB)

Isi artikel

We re-examine the basic investment problem of deciding when to incur a sunk cost to obtain a stochastically ¯uctuating bene®t. The optimal investment rule satis®es a trade-off between a larger versus a later net bene®t; we show that this trade-off is closely analogous to the standard trade-off for the pricing decision of a ®rm that faces a downward sloping demand curve. We reinterpret the optimal investment rule as a markup formula involving an elasticity that has exactly the same form as the formula for a ®rm's optimal markup of price over marginal cost. This is illustrated with several examples.

Opini Anda

Klik untuk menuliskan opini Anda tentang koleksi ini!

Kembali