The Value of Flexibility in Sequencing Irreversible Investment ¤

We analyze the investment decision of a ...rm that may complete a project either in one lump or in smaller parts at distinct points in time. The ...rm faces a trade-o¤ between the cost savings that arise when the project is completed in one go and the additional ‡exibility that arises when the ...rm is able to respond to resolving uncertainty by choosing… CONTINUE READING