Real options and the Jorgensonian user cost of capital
AbstractDixit and Pindyck (1994) claim that the Jorgensonian rule of investment (Jorgenson, 1963) does not hold in uncertain settings. This note shows that the validity of that claim depends crucially on the particular process chosen to describe the economic uncertainty. In fact, the Jorgensonian rule of investment holds in other real options models.
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Bibliographic InfoArticle provided by Fundación SEPI in its journal Investigaciones Economicas.
Volume (Year): 29 (2005)
Issue (Month): 3 (September)
Contact details of provider:
Postal: Investigaciones Economicas Fundación SEPI Quintana, 2 (planta 3) 28008 Madrid Spain
Web page: http://www.fundacionsepi.es/
Find related papers by JEL classification:
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
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