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Options, Timing, and Regional Entry of Firms

Author

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  • Berglund, Elisabet

    () (Department of Economics, Umeå University)

Abstract

This 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.

Suggested Citation

  • Berglund, Elisabet, 1999. "Options, Timing, and Regional Entry of Firms," Umeå Economic Studies 505, Umeå University, Department of Economics.
  • Handle: RePEc:hhs:umnees:0505
    as

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    File URL: http://www.econ.umu.se/DownloadAsset.action?contentId=121180&languageId=3&assetKey=ues505
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    References listed on IDEAS

    as
    1. Dixit, Avinash K, 1989. "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 620-638, June.
    2. Pindyck, Robert S, 1991. "Irreversibility, Uncertainty, and Investment," Journal of Economic Literature, American Economic Association, pages 1110-1148.
    3. Pindyck, Robert S, 1991. "Irreversibility, Uncertainty, and Investment," Journal of Economic Literature, American Economic Association, pages 1110-1148.
    4. Robert McDonald & Daniel Siegel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, Oxford University Press, vol. 101(4), pages 707-727.
    5. Elisabet Berglund & Kurt Brännäs, 2001. "Plants' entry and exit in Swedish municipalities," The Annals of Regional Science, Springer;Western Regional Science Association, pages 431-448.
    6. Berglund, Elisabet, 1999. "Human Capital and Regional Entry of Firms," Umeå Economic Studies 500, Umeå University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Timing; Regional uncertainty; Brownian motion;

    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)

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