How to escape a declining market: capacity investment or exit?

DOI10.1016/J.EJOR.2016.04.009zbMath1346.91123OpenAlexW2339930947MaRDI QIDQ323283

Peter M. Kort, Kuno J. M. Huisman, Verena Hagspiel, Clàudia Nunes

Publication date: 7 October 2016

Published in: European Journal of Operational Research (Search for Journal in Brave)

Full work available at URL: https://doi.org/10.1016/j.ejor.2016.04.009

zbMATH Keywords

investment analysisreal optionsexitcapacity investmentdeclining market

Mathematics Subject Classification ID

Production theory, theory of the firm (91B38) Brownian motion (60J65)

Related Items (13)

Hysteresis due to irreversible exit: addressing the option to mothball ⋮ Technology adoption in a declining market ⋮ Investment in two alternative projects with multiple switches and the exit option ⋮ Unnamed Item ⋮ The interaction of debt financing, cash grants and the optimal investment policy under uncertainty ⋮ Rescaling-contraction with a lower cost technology when revenue declines ⋮ Model risk in real option valuation ⋮ Unnamed Item ⋮ The effects of asset liquidity on dynamic sell-out and bankruptcy decisions ⋮ Capacity investment choices under cost heterogeneity and output flexibility in oligopoly ⋮ Green electricity investments: environmental target and the optimal subsidy ⋮ The optimal stopping problem revisited ⋮ Leaving well-worn paths: reversal of the investment-uncertainty relationship and flexible biogas plant operation

Cites Work

• Unnamed Item
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• Optimal timing of technology adoption
• Choosing among alternative discrete investment projects under uncertainty
• On the properties of \(r\)-excessive mappings for a class of diffusions
• Investment and capacity choice under uncertain demand
• Properties of American option prices
• Invest or Exit? Optimal Decisions in the Face of a Declining Profit Stream
• Strategic Technology Choice and Capacity Investment Under Demand Uncertainty
• A Modification of the Sequential Probability Ratio Test to Reduce the Sample Size
• Investment and the Valuation of Firms When There is an Option to Shut Down
• Diffusions and Elliptic Operators
• Resource Flexibility with Responsive Pricing
• Adoption of uncertain multi-stage technology projects: a real options approach
• The net present value method versus the option value of waiting: A note on Farzin, Huisman and Kort (1998)

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