Optimal investment policies for a polluting firm in an uncertain environment

Article Abstract:

The determination of optimal investments for pollution abatement is examined within the framework of a stochastic dynamic model of a firm. The model evaluates pollution-generating and non-pollution-generating production activities with respect to the firm's profitability. The former requires the firm to pay taxes while the latter requires abatement investments to lower the taxes. Subsequently, it is shown that firms in a strong financial position grow when expected marginal earnings from productive and abatement investments are balanced.

Research, Investments, Emissions credit trading, Emissions trading, Tax abatement

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The effect of information streams on capital budgeting decisions

Article Abstract:

The study focuses on a firm that is faced with the decision of investing in a project where, over time, the firm receives imperfect signals indicating the project's profitability. Results demonstrate that the probability of investing in a project with low profitability is larger when the firm uses a conventional rule like the net present value.

United States, Bayesian statistical decision theory, Bayesian analysis

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Strategic technology adoption taking into account future technological improvements: a real options approach

Article Abstract:

The study is on the technology adoption decision of firms between available technology and another technology that is superior, but the availability time in the future not known. The fix is that if the available technology is adopted the new technology cannot be adopted; the implications for investment and revenue decisions are analyzed.

Methods, Analysis, Technology assessment

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