Download or read book Product Market Competition and the Impact of Price Uncertainty on Investment written by Vivek Ghosal and published by . This book was released on 1995 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Impact of Market Structure and Irreversibility on Investment Under Uncertainty written by Sara Maioli and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Investment under Uncertainty written by Robert K. Dixit and published by Princeton University Press. This book was released on 2012-07-14 with total page 484 pages. Available in PDF, EPUB and Kindle. Book excerpt: How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made. In so doing, they answer important questions about investment decisions and the behavior of investment spending. This new approach to investment recognizes the option value of waiting for better (but never complete) information. It exploits an analogy with the theory of options in financial markets, which permits a much richer dynamic framework than was possible with the traditional theory of investment. The authors present the new theory in a clear and systematic way, and consolidate, synthesize, and extend the various strands of research that have come out of the theory. Their book shows the importance of the theory for understanding investment behavior of firms; develops the implications of this theory for industry dynamics and for government policy concerning investment; and shows how the theory can be applied to specific industries and to a wide variety of business problems.
Download or read book Irreversibility Uncertainty and Investment written by Robert S. Pindyck and published by World Bank Publications. This book was released on 1989 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: Irreversible investment is especially sensitive to such risk factors as volatile exchange rates and uncertainty about tariff structures and future cash flows. If the goal of macroeconomic policy is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates.
Download or read book Product Market Competition and Investment Efficiency written by Long Yi and published by . This book was released on 2017-01-27 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation, "Product Market Competition and Investment Efficiency" by Long, Yi, 易龍, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: This thesis consists of two essays on the impacts product market competition has on the real investment efficiency of firms. While the first essay looks at this question through the corporate governance angle and finds product market competition complements institutional investors in disciplining firms, the latter one studies the impacts from an information production point of view and concludes competition reduces the incentive of firms to acquire information thereby reduces investment efficiency. Using product market competition as a proxy for external corporate governance, the first essay documents a sizeable difference between the governance impact of institutional investors on firms with strong and weak external corporate governance. Higher institutional ownership is associated with real efficiency of firms, but only when external corporate governance is strong. The real efficiency is reflected in higher investment sensitivity to investment opportunities and higher firm value. Utilizing the passing of business combination laws as a negative shock to external corporate governance, the essay identifies that firms with higher institutional ownership suffer a larger decrease in real efficiency, suggesting external corporate governance such as product market competition is critical for institutional investors in disciplining firms. The second essay attempts to figure out the impact of product market competition from an ex ante point of view. Specifically, how does product market competition change the incentive of firms to acquire information about investment opportunities ex ante? The essay provides both a model and a series of extensive empirical tests. The model features a two-stage Bayesian game in differentiated products market competition. This essay finds that competition causes firms to acquire less information and that investment becomes more inefficient in competitive industries. Empirically investment efficiency is measured by a latent variable technique and related to competition using a Herfindahl-Hirschman index as well as more exogenous measure such as trade costs. The panel regression analysis provides strong support for the theory and shows that investment is more efficient in concentrated industries. DOI: 10.5353/th_b5270556 Subjects: Capital investments Competition Corporate governance
Download or read book Competition and the Real Effects of Uncertainty written by Raja Patnaik and published by . This book was released on 2016 with total page 83 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the impact of uncertainty on firm-level capital investment and examines whether this effect depends on the degree of competition that firms face. I exploit a unique empirical setting to construct a time-varying uncertainty measure that is exogenous to economic conditions and firm behavior. I show that higher uncertainty results in a decrease in investment for firms in more concentrated industries. The effect is stronger for firms that face higher costs associated with reversing investments. This finding is in line with irreversible investment models that predict a negative relationship between uncertainty and investment. In contrast, firms in highly competitive industries increase investment in response to higher uncertainty, supporting the argument that competition can erode the option value of deferring investment. In that case, other industry and firm characteristics such as operational flexibility can result in increased investment in response to heightened uncertainty. I also find economically significant effects of uncertainty on other types of investment such as R&D spending, advertising and investment in human capital. Collectively, my results illustrate that the degree of competition plays an important role in the link between uncertainty and investment.
Download or read book Optimal Capacity Investment and Pricing Across International Markets Under Exchange Rate Uncertainty and Duopoly Competition written by Anas A. Ahmed and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this dissertation we investigate joint optimal capacity investment, pricing and production decisions for a multinational manufacturer who faces exchange rate uncertainties. We consider a manufacturer that sells its product in both domestic and foreign markets over a multiperiod season. Because of long-lead times, the capacity investment must be committed before the selling season begins. The exchange rate between the two countries fluctuates across period and the demand in both markets is price dependent. In the first part, the model considers three scenarios: (1) early commitment to price and quantity with central sourcing, (2) postponement of prices and quantities with central sourcing, and (3) local sourcing. We derive the optimal capacity and the optimal prices for each scenario, and investigate the impact of the exchange rate parameters and the length of the selling season on optimal capacity investment, production allocation, and pricing decisions. We observe that while the price and production decisions in the domestic market are independent of the exchange rate under early commitment and local sourcing scenarios, the exchange rate between two countries directly impacts these decisions under the postponement setting. We identify thresholds and gain insights on investment costs, market potentials, exchange rate drifts, and selling season length for the choice of entering a foreign market under all scenarios. In the second part of this dissertation, we consider a duopoly competition in the foreign country. We consider a single period setting and we model the exchange rate as a random variable. We assume two scenarios: (1) Exogenous Model, where the price of the foreign manufacturer is set a priori, and (2) Endogenous Model, where the prices are set simultaneously based on a Nash Game outcome. In the Exogenous Model, we study the impact of exchange rate and foreign manufacturer's price on optimal capacity and prices. In the Endogenous Model, we investigate the impact of competition and exchange rate on optimal capacities and optimal prices. We show how competition can impact the decision of the home manufacturer to enter the foreign market.
Download or read book Product Market Competition and the Profitability Premium written by Yao Deng and published by . This book was released on 2019 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the impact of product market competition on the well-documented positive relation between firms' current profitability and future stock returns. I find that this relation is robust only in competitive industries. A long-short portfolio sorted on profitability earns an average monthly return of 1.1% in competitive industries and only 0.14% in concentrated industries. Firms' differential exposure to investment-specific technology shocks explains this gap. To understand this result, I build a production-based model with imperfect competition. Market power reduces a firm's investment response to these shocks and thus lowers risk exposure. Empirical tests confirm the model's predictions.
Download or read book Product Market Competition Investment and Employment abundant Versus Job poor Growth written by Yu-Fu Chen and published by . This book was released on 2005 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: The role of product market reforms in achieving the objective of higher employment and growth has recently received much attention amongst academics. The aim of this paper is to analyse some of the channels through which cross-market effects come about and to assess their policy relevance. The analytic strategy of this paper relies upon the stochastic real options modelling approach. In a nutshell, our simulations using numerical methods indicate that comprehensive product market reforms would increase factor demand and growth significantly in the medium and long run.
Download or read book Oil Price Uncertainty written by Apostolos Serletis and published by World Scientific Publishing Company Incorporated. This book was released on 2012 with total page 142 pages. Available in PDF, EPUB and Kindle. Book excerpt: The relationship between the price of oil and the level of economic activity is a fundamental issue in macroeconomics. There is an ongoing debate in the literature about whether positive oil price shocks cause recessions in the United States (and other oil-importing countries), and although there exists a vast empirical literature that investigates the effects of oil price shocks, there are relatively few studies that investigate the direct effects of uncertainty about oil prices on the real economy. The book uses recent advances in macroeconomics and financial economics to investigate the effects of oil price shocks and uncertainty about the price of oil on the level of economic activity.
Download or read book The Impact of Uncertainty and Sunk Costs on Firm Dynamics and Industry Structure written by Vivek Ghosal and published by . This book was released on 2001 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book IMF Staff Papers Volume 53 No 3 written by International Monetary Fund. Research Dept. and published by International Monetary Fund. This book was released on 2006-12-15 with total page 183 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is the final issue for 2006 (Volume 53), and contains another paper in the occasional Special Data Section that seeks to measure financial development in the Middle East and North Africa by utilizing a new database. The issue also contains a comment from Jacques J. Polak on parity reversion in real exchange rates.
Download or read book Firm Innovation in Emerging Markets written by Meghana Ayyagari and published by World Bank Publications. This book was released on 2012 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: The authors investigate the determinants of firm innovation in over 19,000 firms across 47 developing economies. They define the innovation process broadly, to include not only core innovation such as the introduction of new products and new technologies, but also other types of activities that promote knowledge transfers and adapt production processes. The authors find that more innovative firms are large exporting firms characterized by private ownership, highly educated managers with mid-level managerial experience, and access to external finance. In contrast, firms that do not innovate much are typically state-owned firms without foreign competitors. The identity of the controlling shareholder seems to be particularly important for core innovation, with those private firms whose controlling shareholder is a financial institution being the least innovative. While the use of external finance is associated with greater innovation by all private firms, it does not make state-owned firms more innovative. Financing from foreign banks is associated with higher levels of innovation compared with financing from domestic banks.
Download or read book Investment Capital Market Imperfections and Uncertainty written by Robert Lensink and published by Edward Elgar Publishing. This book was released on 2001-01-01 with total page 176 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents an up-to-date overview of the theory as well as the empirics of the relationship between investment, financial imperfections and uncertainty. After reviewing the capital market imperfections literature and the empirical results, the authors discuss both traditional investment models with uncertainty and the more modern option based models. They present an overview of empirical results of the modelling of investment under uncertainty. In these examples the effects of capital market imperfections on investment are carefully considered. The authors conclude that there is overwhelming empirical support for a negative uncertainty-investment relationship. This book should appeal to academics with an interest in investment theory, professionals in the financial sector and students of macroeconomics and finance. "Investment, Capital Market Imperfections, and Uncertainty" assumes only a basic knowledge of mathematics and is easily accessible.
Download or read book The impact of product market competition on expected returns written by Chung-Shin Liu and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Status Signals written by Joel M. Podolny and published by Princeton University Press. This book was released on 2010-12-16 with total page 304 pages. Available in PDF, EPUB and Kindle. Book excerpt: Why are elite jewelers reluctant to sell turquoise, despite strong demand? Why did leading investment bankers shun junk bonds for years, despite potential profits? Status Signals is the first major sociological examination of how concerns about status affect market competition. Starting from the basic premise that status pervades the ties producers form in the marketplace, Joel Podolny shows how anxieties about status influence whom a producer does (or does not) accept as a partner, the price a producer can charge, the ease with which a producer enters a market, how the producer's inventions are received, and, ultimately, the market segments the producer can (and should) enter. To achieve desired status, firms must offer more than strong past performance and product quality--they must also send out and manage social and cultural signals. Through detailed analyses of market competition across a broad array of industries--including investment banking, wine, semiconductors, shipping, and venture capital--Podolny demonstrates the pervasive impact of status. Along the way, he shows how corporate strategists, tempted by the profits of a market that would negatively affect their status, consider not only whether to enter the market but also whether they can alter the public's perception of the market. Podolny also examines the different ways in which a firm can have status. Wal-Mart, for example, has low status among the rich as a place to shop, but high status among the rich as a place to invest. Status Signals provides a systematic understanding of market dynamics that have--until now--not been fully appreciated.
Download or read book Product Market Competition and the Value of Corporate Cash written by Azizjon Alimov and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses the 1989 Canada-U.S. Free Trade Agreement as a source of exogenous variation in product markets to establish the impact of increased competition on the market valuation of corporate cash reserves. I find that the trade liberalization leads to a significant increase in the value of cash for firms experiencing a larger shock to their competitive environment. The impact of the trade liberalization is stronger among firms that face greater risk of losing investment opportunities to rivals. I also show that these inferences about the valuation effect of competition apply more broadly to a large sample of firms.
