Options, Timing, and Regional Entry of Firms
AbstractThis paper studies how the possibility to postpone the unrecoverable entry and location cost affects regional entry when post-entry earnings are uncertain. We find that the opportunity cost to enter today is higher when entering a region with high uncertainty relative to a region with low uncertainty.
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Bibliographic InfoPaper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 505.
Length: 13 pages
Date of creation: 21 Apr 1999
Date of revision:
Contact details of provider:
Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
Web page: http://www.econ.umu.se/
More information through EDIRC
Timing; Regional uncertainty; Brownian motion;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-04-27 (All new papers)
- NEP-IND-1999-04-27 (Industrial Organization)
- NEP-MIC-1999-04-27 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- McDonald, Robert & Siegel, Daniel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, MIT Press, vol. 101(4), pages 707-27, November.
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- Pindyck, Robert, 1989. "Irreversibility, uncertainty, and investment," Policy Research Working Paper Series 294, The World Bank.
- Robert S. Pindyck, 1991. "Irreversibility, Uncertainty, and Investment," NBER Working Papers 3307, National Bureau of Economic Research, Inc.
- Berglund, Elisabet, 1999. "Human Capital and Regional Entry of Firms," UmeÃ¥ Economic Studies 500, Umeå University, Department of Economics.
- Berglund, Elisabet & Brännäs, Kurt, 1999.
"Plants' Entry and Exit in Swedish Municipalities,"
UmeÃ¥ Economic Studies
497, Umeå University, Department of Economics.
- Dixit, Avinash K, 1989.
"Entry and Exit Decisions under Uncertainty,"
Journal of Political Economy,
University of Chicago Press, vol. 97(3), pages 620-38, June.
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