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| Author: | Aguerrevere, F. L. |
| Title: | Equilibrium investment strategies and output price behavior: a real-options approach |
| Journal: | Review of Financial Studies
2003 : WINTER, VOL. 16:4, p. 1239-1272 |
| Index terms: | Equilibrium theory Exchange equilibrium Price theory |
| Language: | eng |
| Abstract: | The effects of competitive interactions on investment decisions and on the dynamics of the price of a nonstorable commodity are studied in a model of incremental investment with time to build and operating flexibility. The author finds that an increase in uncertainty may encourage firms to increase their capacity. He also shows that it may be optimal to invest in additional capacity during periods in which part of the operational capacity is not being utilized. |
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