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Options, Timing, and Regional Entry of Firms

Author

Listed:
  • 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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    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, vol. 29(3), pages 1110-1148, September.
    3. 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.
    4. Elisabet Berglund & Kurt Brännäs, 2001. "Plants' entry and exit in Swedish municipalities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 35(3), pages 431-448.
    5. 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)

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    More about this item

    Keywords

    Timing; Regional uncertainty; Brownian motion;
    All these keywords.

    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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