Browsing Working Papers by Author "Dixit, Avinash K."

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    • Expandability, reversibility, and optimal capacity choice 

      Dixit, Avinash K.; Pindyck, Robert S. (MIT Center for Energy and Environmental Policy Research, 1997)
      We develop continuous-time models of capacity choice when demand fluctuates stochastically, and the firm's opportunities to expand or contract are limited. Specifically, we consider costs of investing or disinvesting that ...

    • A markup interpretation of optimal rules for irreversible investment 

      Dixit, Avinash K.; Pindyck, Robert S.; Sødal, Sigbjørn (MIT Center for Energy and Environmental Policy Research, 1997)
      We re-examine the basic investment problem of deciding when to incur a sunk cost to obtain a stochastically fluctuating benefit. The optimal investment rule satisfies a trade-off between a larger versus a later net benefit; ...

    • The new option view of investment 

      Dixit, Avinash K.; Pindyck, Robert S. (MIT Center for Energy and Environmental Policy Research, 1995)
      This paper provides a simple introduction to the new option view of investment. We explain the shortcomings of the orthodox theory, and then outline the basic ideas behind the option framework. Several industry examples ...