On Irreversible Investment

Riedel F, Su X (2011)
Finance and Stochastics 15(4): 607-633.

Journal Article | Published | English

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This paper presents a new and general approach to the theory of irreversible investment. We show that the optimal policy is a base capacity policy and derive general monotone comparative statics results. When the operating profit function is supermodular, the base capacity increases monotonically with the exogenous shock; and firm size is decreasing in the user cost of capital. Last but not least, the paper provides a general existence theorem for optimal policies.
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Riedel F, Su X. On Irreversible Investment. Finance and Stochastics. 2011;15(4):607-633.
Riedel, F., & Su, X. (2011). On Irreversible Investment. Finance and Stochastics, 15(4), 607-633.
Riedel, F., and Su, X. (2011). On Irreversible Investment. Finance and Stochastics 15, 607-633.
Riedel, F., & Su, X., 2011. On Irreversible Investment. Finance and Stochastics, 15(4), p 607-633.
F. Riedel and X. Su, “On Irreversible Investment”, Finance and Stochastics, vol. 15, 2011, pp. 607-633.
Riedel, F., Su, X.: On Irreversible Investment. Finance and Stochastics. 15, 607-633 (2011).
Riedel, Frank, and Su, Xia. “On Irreversible Investment”. Finance and Stochastics 15.4 (2011): 607-633.
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