Real options and the Jorgensonian user cost of capital
Dixit 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.
Volume (Year): 29 (2005)
Issue (Month): 3 (September)
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