Description
Book SynopsisHow should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? This book provides an exposition of a theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions.
Trade Review"[The authors'] approach has powerful implications for investors in marketable assets as well. No investment professional or CFO can afford to ignore this brilliant new book."
—Peter L. Bernstein, author of Capital Ideas: The Improbable Origins of Modern Wall Street"Avinash Dixit and Robert Pindyck have successfully applied to capital budgeting the ideas and techniques of option pricing that have so enriched our understanding of financial markets."
—Merton H. Miller, Nobel Laureate in EconomicsTable of ContentsPreface1A New View of Investment32Developing the Concepts Through Simple Examples263Stochastic Processes and Ito's Lemma594Dynamic Optimization under Uncertainty935Investment Opportunities and Investment Timing1356The Value of a Project and the Decision to Invest1757Entry, Exit, Lay-Up, and Scrapping2138Dynamic Equilibrium in a Competitive Industry2479Policy Intervention and Imperfect Competition28210Sequential Investment31911Incremental Investment and Capacity Choice35712Applications and Empirical Research394References429Symbol Glossary445Author Index449Subject Index455
