The Optimal Timing of the Introduction of New Products
This paper addresses the e�ects for partial equilibrium models of relaxing one of the critical underlying assumptions of the textbook approach (Dixit and Pyndick, 1994) to investment under uncertainty: either the potential investor has access to a single project or she can consider competing (or complementary) projects independently. This paper studies the investment decision of a multi-product monopolist where the projects exhibit interdepen- dence between the cash ‡ows of di�erent products. We derive the optimal entry time for each product and show that both the choice and timing of investment is di�erent from that suggested by the textbook approach. The decision to produce related goods simultaneously or sequentially crucially depends on their degree of substitutability or complementarity.
|Date of creation:||Jul 2010|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.utdt.edu/ver_contenido.php?id_contenido=439&id_item_menu=568|
More information through EDIRC
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.:
- Lambrecht, Bart & Perraudin, William, 2003. "Real options and preemption under incomplete information," Journal of Economic Dynamics and Control, Elsevier, vol. 27(4), pages 619-643, February.
When requesting a correction, please mention this item's handle: RePEc:udt:wpecon:2010-07. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martin Cecilia Lafuente)
If references are entirely missing, you can add them using this form.