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Title:A simple model of investment with an infinite number of technologies PDF Logo
Authors:Klepper, Mathis
Issue Date:2010
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Dynamic Models of Investment D8-V1
Abstract:This paper investigates technology adoption of a single firm in a continuous time model with an infinite planning horizon and an infinite number of investment opportunities. Technological progress is exogenous and modeled either by a poisson process or a geometric poisson process. For both processes, we characterize the optimal investment strategies. In the case of a poisson process we show that a cyclical investment pattern, that is adopting every m-th technology is optimal. If technological progress is modeled as a geometric poisson process, we argue that the number of technologies not adopted between two adoptions decreases with time, until finally each new technology will be adopted.
Subjects:Technology adoption
Technological uncertainty
Investment irreversebility
Optimal timing
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie

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