The timing and intensity of investment

Article Abstract:

The timing and intensity of capital stock is analyzed by three models: the new view model, the incremental investment model and the lumpy investment model The new view and incremental models are one-dimensional because they can only consider either timing or intensity. The lumpy investment model is two-dimensional, including both timing and intensity. Capital stock evolves differently when the lumpy model is used unlike when the incremental model is applied.

Author: Bar-Ilan, Avner, Strange, William C.
Analysis, Capital stock

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Investment lags

Article Abstract:

A model of irreversible investment is developed to evaluate the economic impact of investment lags. These lags, which are also referred to as 'time-to-build,' 'construction lag' and 'gestation period,' minimize price uncertainty effects on investment. Thus, companies in commercial real estate development, electric power generation and bulk chemical manufacturing should not be concerned with the excess supply observed for their industries.

Author: Bar-Ilan, Avner, Strange, William C.
Capital investments, Economic lag

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A model of sequential investment

Article Abstract:

The two-stage sequential investment model proved to be useful for firms involved in exploratory investment. Sequential investment offers companies an incentive in undertaking exploratory investment depending on their capacity to delay the project. Factors such as price uncertainty and first-stage cost were proven essential in enhancing the positive effect of sequential investment.

Author: Bar-Ilan, Avner, Strange, William C.
Portfolio Management, Economic aspects

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Subjects list: Models, Investments
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