Investment Size and Firm's Value Under Profit Sharing Regulation

Arbeitspapier

In this article we analyse the effects of different regulatory schemes (price cap and profit sharing) on a firm's investment of endogenous size. Using a real option approach in continuous time, we show that profit sharing does not affect a firm's start-up decision relative to a pure price cap scheme. Unless the threshold after which profit sharing intervenes is very high, however, introducing a profit sharing element delays further investments: this decreases the present value of total investment. We also evaluate the reduction in the firm's value due to profit sharing, linking this reduction to the option value of future investments.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Nota di Lavoro ; No. 80.2003

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Economics of Regulation ; Criteria for Decision-Making under Risk and Uncertainty ; Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
• Thema: Regulation ; Investment ; Profit sharing ; Real options ; RPI-x ; Anreizregulierung ; Regulierung ; Investition ; Betriebsgröße ; Unternehmenswachstum ; Theorie ; Realoptionsansatz

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Moretto, Michele ; Panteghini, Paolo M. ; Scarpa, Carlo
• Ereignis: Veröffentlichung
• (wer): Fondazione Eni Enrico Mattei (FEEM)
• (wo): Milano
• (wann): 2003

Weitere Informationen

• Handle: http://hdl.handle.net/10419/118116
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ