Constant Investment Cost
The literature on technology adoption can be divided into two classes: the first class is called decision theoretic models and the second class game theoretic models. See Bridges et al., 1991 for an overview of literature from both classes. In a decision theoretic model the profit of the firm is only influenced by its own technology adoption decisions, whereas in a game theoretic model the profit of the firm is also influenced by the decisions of its rivals. In the second and third chapter we study decision theoretic models of technology adoption. This implies that either the firm is a monopolist or a price taker on its output market. From Chapter 4 onwards strategic interactions are incorporated in the technology investment problem.
KeywordsTechnology Adoption Technology Investment Jump Size Investment Problem Termination Payoff
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