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Central European Journal of Operations Research

, Volume 18, Issue 4, pp 477–489 | Cite as

Diversity of firm’s life cycle adapted from the firm’s technology investment decision

  • Emmanuelle Fortune-Devlaminckx
  • Josef L. HaunschmiedEmail author
Original Paper

Abstract

The stylized model presented is an optimal control model of technology investment decision of a single product firm. The firm’s technology investment does not have only a long-run positive effect but also a short-run adverse effect on its sales volume. We examine the case of high adverse investment effects where the firm finally leaves the market but we have observed different life cycles till this happens. Depending on the firm’s initial technology stock and sales volume, we compute different firm’s life cycles, which are driven by a trade-off between two strategies: technology versus sales focus strategy. Indifference curves, where managers are indifferent to apply initially technology or sales focus strategies, separate founding conditions of the firm to various classes distinguishable because of the firm’s life cycle.

Keywords

Technology investment Firm’s life cycle Optimal control Non linear economic dynamics Indifference curves Computational economics 

JEL Classification

D21 O30 

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Copyright information

© Springer-Verlag 2010

Authors and Affiliations

  • Emmanuelle Fortune-Devlaminckx
    • 1
    • 2
  • Josef L. Haunschmied
    • 1
    Email author
  1. 1.Institute of Mathematical Methods in EconomicsVienna University of TechnologyViennaAustria
  2. 2.Observatoire Français des Conjonctures Economiques, OFCE-DRIC-CNRSValbonneFrance

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