Structural analysis of optimal investment for firms with non-concave revenues
Qualitative properties of optimal investment strategies for a firm with quadratic costs and non-concave revenues are analysed. Organising information in a bifurcation diagram, it is found that the organising centre of the diagram is a so-called swallow-tail singularity. This implies the existence of threshold (or Skiba) points for positive discount factors. The parameter region for which threshold points exist is determined numerically, and for small discount factors some of its properties are derived by an approximation method.
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