Abstract

http://ssrn.com/abstract=226122
 
 

Citations (15)



 


 



Expandability, Reversibility, and Optimal Capacity Choice


Avinash Dixit


Princeton University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Robert S. Pindyck


Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

January 1998

NBER Working Paper No. w6373

Abstract:     
We develop continuous-time models of capacity choice when demand fluctuates stochastically, and the firm's opportunities to expand or contract are limited. Specifically consider costs of investing or disinvesting that vary with time, or with the amount of capacity already installed. The firm's limited opportunities to expand or contract create call and put options on incremental units of capital; we show how the values of these options affect the firm's investment decisions.

Number of Pages in PDF File: 31

working papers series





Download This Paper

Date posted: July 14, 2000  

Suggested Citation

Dixit, Avinash and Pindyck, Robert S., Expandability, Reversibility, and Optimal Capacity Choice (January 1998). NBER Working Paper No. w6373. Available at SSRN: http://ssrn.com/abstract=226122

Contact Information

Avinash K. Dixit (Contact Author)
Princeton University - Department of Economics ( email )
Princeton, NJ 08544-1021
United States
609-258-4013 (Phone)
609-258-6419 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
HOME PAGE: http://www.CESifo.de
Robert S. Pindyck
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
50 Memorial Drive, E52-450
Cambridge, MA 02142
United States
617-253-6641 (Phone)
617-258-6855 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Feedback to SSRN


Paper statistics
Abstract Views: 987
Downloads: 35
Citations:  15

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.312 seconds