Endogenous Timing and the Taxation of Discrete Investment Choices
19 Pages Posted: 30 Jun 2002
Date Written: May 2002
This article discusses the effects of taxation on the discrete choice of alternative projects. In particular, it is shown that if taxation affects the optimal timing of irreversible investment, then the discrete choice is distorted as well. This result has both methodological and political implications.
Keywords: Effective Average Tax Rate, Timing and Real Options
JEL Classification: H25, H32
Suggested Citation: Suggested Citation