A markup interpretation of optimal rules for irreversible investment
We re-examine the basic investment problem of deciding when to incur a sunk cost to obtain a stochastically fluctuating benefit. The optimal investment rule satisfies a trade-off between a larger versus a later net benefit; we show that this trade-off is closely analogous to the standard trade-off f...
| Main Authors: | , , |
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| Other Authors: | |
| Format: | Working Paper |
| Published: |
MIT Center for Energy and Environmental Policy Research
2009
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| Online Access: | http://hdl.handle.net/1721.1/50227 |