The delaying effect of financiing constraints on investment

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Abstract

We develop a simple model in which a firm considers a number of investment projects. Because of limited financial resources, the firm can undertake at most one project. In line with the literature on real options we stress features like irreversibility, uncertainty and the possibility of postponing the investment decision and show under which conditions limited availability of funds tends to increase the value of waiting.
Original languageEnglish
Pages (from-to)271-282
JournalEconomics Bulletin
Volume56
Issue number3
DOIs
Publication statusPublished - 1 Jan 2004

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