• norsk
    • English
  • English 
    • norsk
    • English
  • Login
View Item 
  •   Home
  • Norges Handelshøyskole
  • Department of Business and Management Science
  • Discussion papers (FOR)
  • View Item
  •   Home
  • Norges Handelshøyskole
  • Department of Business and Management Science
  • Discussion papers (FOR)
  • View Item
JavaScript is disabled for your browser. Some features of this site may not work without it.

Sequential Investment in Emerging Technologies under Policy Uncertainty

Sendstad, Lars Hegnes; Chronopoulos, Michail
Working paper
Thumbnail
View/Open
1016.pdf (1.437Mb)
URI
http://hdl.handle.net/11250/2392475
Date
2016-06-14
Metadata
Show full item record
Collections
  • Discussion papers (FOR) [509]
Abstract
Investment in emerging technologies is particularly challenging, since, apart from uncertainty in revenue streams, firms must also take into account both policy uncertainty and the random arrival of innovations. We assume that the former is reflected in the sudden provision and retraction of a support scheme, which takes the form of a fixed premium on top of the output price. Thus, we develop an analytical framework for sequential investment in order to determine how price, technological, and policy uncertainty interact to affect the decision to invest sequentially in successively improved versions of an emerging technology. We show that greater likelihood of subsidy retraction lowers the incentive to invest, whereas greater likelihood of subsidy provision facilitates investment. However, embedded options to invest in improved technology versions raise the value of the investment opportunity, thereby mitigating the impact of subsidy retraction and making the impact of subsidy provision more pronounced. Additionally, by allowing for sequential policy interventions, we find that the impact of policy uncertainty becomes less pronounced as the number of policy interventions increases.
Publisher
FOR
Series
Discussion paper;10/16

Contact Us | Send Feedback

Privacy policy
DSpace software copyright © 2002-2019  DuraSpace

Service from  Unit
 

 

Browse

ArchiveCommunities & CollectionsBy Issue DateAuthorsTitlesSubjectsDocument TypesJournalsThis CollectionBy Issue DateAuthorsTitlesSubjectsDocument TypesJournals

My Account

Login

Statistics

View Usage Statistics

Contact Us | Send Feedback

Privacy policy
DSpace software copyright © 2002-2019  DuraSpace

Service from  Unit