An exact solution for the investment and value of a firm facing uncertainty, adjustment costs, and irreversibility
This paper derives closed-form solutions for the investment and value of a competitive firm with a constant-returns-to-scale production function and convex costs of adjustment. Solutions are derived for the case of irreversible investment as well as for reversible investment. Optimal investment is a...
Gespeichert in:
| Veröffentlicht in: | Journal of economic dynamics & control 1997-05, Vol.21 (4), p.831-852 |
|---|---|
| Hauptverfasser: | , |
| Format: | Artikel |
| Sprache: | eng |
| Schlagworte: | |
| Online-Zugang: | Volltext |
| Tags: |
Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
|
| container_end_page | 852 |
|---|---|
| container_issue | 4 |
| container_start_page | 831 |
| container_title | Journal of economic dynamics & control |
| container_volume | 21 |
| creator | Abel, Andrew B. Eberly, Janice C. |
| description | This paper derives closed-form solutions for the investment and value of a competitive firm with a constant-returns-to-scale production function and convex costs of adjustment. Solutions are derived for the case of irreversible investment as well as for reversible investment. Optimal investment is a non-decreasing function of
q, the shadow value of capital. Relative to the case of reversible investment, the introduction of irreversibility does not affect
q, but it reduces the fundamental value of the firm. |
| doi_str_mv | 10.1016/S0165-1889(97)00005-5 |
| format | Article |
| fullrecord | <record><control><sourceid>proquest_cross</sourceid><recordid>TN_cdi_proquest_miscellaneous_839064293</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><els_id>S0165188997000055</els_id><sourcerecordid>12436322</sourcerecordid><originalsourceid>FETCH-LOGICAL-c610t-ed5552a4e6e64207a7c58461f97fd96cfe45b8ed521941942ebeb6cdbc15a6fc3</originalsourceid><addsrcrecordid>eNqFkU2LFDEQhhtRcFz9CULwosK2dro7XydZFr9gwIN6Dul0xc3QnYxJurH_vTUzyx68GFKVy_O-VOqtqpe0eUcbyt9_x8ZqKqV6o8TbBg-r2aNqR6VQNRV997jaPSBPq2c5H05My-iuSjeBwB9jC8lxWoqPgbiYSLkD4sMKucwQCjFhJKuZFiDREUOcTzNxxvrwiyzBQirGh7JdEzMelnuJjbnk67PSpwQrpOwHP_myPa-eODNleHH_XlU_P338cful3n_7_PX2Zl9bTptSw8gYa00PHHjfNsIIy2TPqVPCjYpbBz0bJFItVT3eFgYYuB0HS5nhznZX1euL7zHF3wt-Rc8-W5gmEyAuWctONeisOiRf_UMe4pICDqep4oJKJQVC7ALZFHNO4PQx-dmkTdNGn3LQ5xz0aclaCX3OQTPU7S-6BEewDyIAGLdgY9Cr7kxLsW1YVKG0Mx6r1wz7EUt2VEvW6rsyo92Hix3g6lYPSWfrAUMYfQJb9Bj9fwb6Cz6Xqws</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype><pqid>196718987</pqid></control><display><type>article</type><title>An exact solution for the investment and value of a firm facing uncertainty, adjustment costs, and irreversibility</title><source>RePEc</source><source>Elsevier ScienceDirect Journals Complete</source><creator>Abel, Andrew B. ; Eberly, Janice C.</creator><creatorcontrib>Abel, Andrew B. ; Eberly, Janice C.</creatorcontrib><description>This paper derives closed-form solutions for the investment and value of a competitive firm with a constant-returns-to-scale production function and convex costs of adjustment. Solutions are derived for the case of irreversible investment as well as for reversible investment. Optimal investment is a non-decreasing function of
q, the shadow value of capital. Relative to the case of reversible investment, the introduction of irreversibility does not affect
q, but it reduces the fundamental value of the firm.</description><identifier>ISSN: 0165-1889</identifier><identifier>EISSN: 1879-1743</identifier><identifier>DOI: 10.1016/S0165-1889(97)00005-5</identifier><identifier>CODEN: JEDCDH</identifier><language>eng</language><publisher>Amsterdam: Elsevier B.V</publisher><subject>Adjustment costs ; Economic control ; Economic dynamics ; Economic models ; Economic theory ; Economies of scale ; Firm theory ; Investment ; Irreversibility ; Production functions ; Studies ; Uncertainty</subject><ispartof>Journal of economic dynamics & control, 1997-05, Vol.21 (4), p.831-852</ispartof><rights>1997</rights><rights>Copyright Elsevier Sequoia S.A. May 1997</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c610t-ed5552a4e6e64207a7c58461f97fd96cfe45b8ed521941942ebeb6cdbc15a6fc3</citedby><cites>FETCH-LOGICAL-c610t-ed5552a4e6e64207a7c58461f97fd96cfe45b8ed521941942ebeb6cdbc15a6fc3</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktohtml>$$Uhttps://dx.doi.org/10.1016/S0165-1889(97)00005-5$$EHTML$$P50$$Gelsevier$$H</linktohtml><link.rule.ids>315,781,785,3551,4009,27928,27929,45999</link.rule.ids><backlink>$$Uhttp://econpapers.repec.org/article/eeedyncon/v_3a21_3ay_3a1997_3ai_3a4-5_3ap_3a831-852.htm$$DView record in RePEc$$Hfree_for_read</backlink></links><search><creatorcontrib>Abel, Andrew B.</creatorcontrib><creatorcontrib>Eberly, Janice C.</creatorcontrib><title>An exact solution for the investment and value of a firm facing uncertainty, adjustment costs, and irreversibility</title><title>Journal of economic dynamics & control</title><description>This paper derives closed-form solutions for the investment and value of a competitive firm with a constant-returns-to-scale production function and convex costs of adjustment. Solutions are derived for the case of irreversible investment as well as for reversible investment. Optimal investment is a non-decreasing function of
q, the shadow value of capital. Relative to the case of reversible investment, the introduction of irreversibility does not affect
q, but it reduces the fundamental value of the firm.</description><subject>Adjustment costs</subject><subject>Economic control</subject><subject>Economic dynamics</subject><subject>Economic models</subject><subject>Economic theory</subject><subject>Economies of scale</subject><subject>Firm theory</subject><subject>Investment</subject><subject>Irreversibility</subject><subject>Production functions</subject><subject>Studies</subject><subject>Uncertainty</subject><issn>0165-1889</issn><issn>1879-1743</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1997</creationdate><recordtype>article</recordtype><sourceid>X2L</sourceid><recordid>eNqFkU2LFDEQhhtRcFz9CULwosK2dro7XydZFr9gwIN6Dul0xc3QnYxJurH_vTUzyx68GFKVy_O-VOqtqpe0eUcbyt9_x8ZqKqV6o8TbBg-r2aNqR6VQNRV997jaPSBPq2c5H05My-iuSjeBwB9jC8lxWoqPgbiYSLkD4sMKucwQCjFhJKuZFiDREUOcTzNxxvrwiyzBQirGh7JdEzMelnuJjbnk67PSpwQrpOwHP_myPa-eODNleHH_XlU_P338cful3n_7_PX2Zl9bTptSw8gYa00PHHjfNsIIy2TPqVPCjYpbBz0bJFItVT3eFgYYuB0HS5nhznZX1euL7zHF3wt-Rc8-W5gmEyAuWctONeisOiRf_UMe4pICDqep4oJKJQVC7ALZFHNO4PQx-dmkTdNGn3LQ5xz0aclaCX3OQTPU7S-6BEewDyIAGLdgY9Cr7kxLsW1YVKG0Mx6r1wz7EUt2VEvW6rsyo92Hix3g6lYPSWfrAUMYfQJb9Bj9fwb6Cz6Xqws</recordid><startdate>19970501</startdate><enddate>19970501</enddate><creator>Abel, Andrew B.</creator><creator>Eberly, Janice C.</creator><general>Elsevier B.V</general><general>Elsevier</general><general>Elsevier Sequoia S.A</general><scope>DKI</scope><scope>X2L</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>19970501</creationdate><title>An exact solution for the investment and value of a firm facing uncertainty, adjustment costs, and irreversibility</title><author>Abel, Andrew B. ; Eberly, Janice C.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c610t-ed5552a4e6e64207a7c58461f97fd96cfe45b8ed521941942ebeb6cdbc15a6fc3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>1997</creationdate><topic>Adjustment costs</topic><topic>Economic control</topic><topic>Economic dynamics</topic><topic>Economic models</topic><topic>Economic theory</topic><topic>Economies of scale</topic><topic>Firm theory</topic><topic>Investment</topic><topic>Irreversibility</topic><topic>Production functions</topic><topic>Studies</topic><topic>Uncertainty</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Abel, Andrew B.</creatorcontrib><creatorcontrib>Eberly, Janice C.</creatorcontrib><collection>RePEc IDEAS</collection><collection>RePEc</collection><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Journal of economic dynamics & control</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Abel, Andrew B.</au><au>Eberly, Janice C.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>An exact solution for the investment and value of a firm facing uncertainty, adjustment costs, and irreversibility</atitle><jtitle>Journal of economic dynamics & control</jtitle><date>1997-05-01</date><risdate>1997</risdate><volume>21</volume><issue>4</issue><spage>831</spage><epage>852</epage><pages>831-852</pages><issn>0165-1889</issn><eissn>1879-1743</eissn><coden>JEDCDH</coden><abstract>This paper derives closed-form solutions for the investment and value of a competitive firm with a constant-returns-to-scale production function and convex costs of adjustment. Solutions are derived for the case of irreversible investment as well as for reversible investment. Optimal investment is a non-decreasing function of
q, the shadow value of capital. Relative to the case of reversible investment, the introduction of irreversibility does not affect
q, but it reduces the fundamental value of the firm.</abstract><cop>Amsterdam</cop><pub>Elsevier B.V</pub><doi>10.1016/S0165-1889(97)00005-5</doi><tpages>22</tpages><oa>free_for_read</oa></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0165-1889 |
| ispartof | Journal of economic dynamics & control, 1997-05, Vol.21 (4), p.831-852 |
| issn | 0165-1889 1879-1743 |
| language | eng |
| recordid | cdi_proquest_miscellaneous_839064293 |
| source | RePEc; Elsevier ScienceDirect Journals Complete |
| subjects | Adjustment costs Economic control Economic dynamics Economic models Economic theory Economies of scale Firm theory Investment Irreversibility Production functions Studies Uncertainty |
| title | An exact solution for the investment and value of a firm facing uncertainty, adjustment costs, and irreversibility |
| url | https://sfx.bib-bvb.de/sfx_tum?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2024-12-16T20%3A53%3A33IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-proquest_cross&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=An%20exact%20solution%20for%20the%20investment%20and%20value%20of%20a%20firm%20facing%20uncertainty,%20adjustment%20costs,%20and%20irreversibility&rft.jtitle=Journal%20of%20economic%20dynamics%20&%20control&rft.au=Abel,%20Andrew%20B.&rft.date=1997-05-01&rft.volume=21&rft.issue=4&rft.spage=831&rft.epage=852&rft.pages=831-852&rft.issn=0165-1889&rft.eissn=1879-1743&rft.coden=JEDCDH&rft_id=info:doi/10.1016/S0165-1889(97)00005-5&rft_dat=%3Cproquest_cross%3E12436322%3C/proquest_cross%3E%3Curl%3E%3C/url%3E&disable_directlink=true&sfx.directlink=off&sfx.report_link=0&rft_id=info:oai/&rft_pqid=196718987&rft_id=info:pmid/&rft_els_id=S0165188997000055&rfr_iscdi=true |