Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 2002 erstellt
Description:
In this paper the impact of policy change on the investment behavior of the firm is studied. The change occurs when a stochastic process describing the state of the economic environment reaches a certain trigger. In our setting both the firm's conjecture concerning the trigger as well as the precision of this conjecture serve as input parameters. We derive the optimal investment rule maximizing the value of the firm. We show that the impact of trigger value uncertainty is non-monotonic: the investment threshold decreases with the trigger value uncertainty for low levels of uncertainty, while the reverse is true for high uncertainty levels. Furthermore, it is shown that the uncertainty concerning the magnitude of the change delays investment. Finally, based on the firm's value-maximizing behavior, policy implications for the authority are presented