Production Flexibility and Investment under Uncertainty

Abstract

This paper extends the theory of real options, which mainly considers the problem of timing of investment, by letting the firm choose also the quantity produced after the time of investment. Under the conditions of irreversible investment and uncertainty in future demand, the firm can adjust its output quantity at each point in time in the future. Our paper… (More)

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Cite this paper

@inproceedings{Hagspiel2009ProductionFA, title={Production Flexibility and Investment under Uncertainty}, author={Verena Hagspiel and Peter M. Kort}, year={2009} }