Arbeitspapier
Optimal Capacity Adjustment by a Multiplant Firm
The paper studies the effect of scale economies on the optimal capacity adjustment of a mutiplant firm. It is shown that with increasing economies of scale plants are ranked in decreasing order, after which the optimal choice is to scrap the largest one. On the contrary, if there are decreasing economies of scale the optimal policy would be to wait before abandoning intermediate plants. That is, decreasing economies of scale amplify the effect of uncertainty on disinvestment and tend to increase the plant's life.
- Language
-
Englisch
- Bibliographic citation
-
Series: Nota di Lavoro ; No. 28.1999
- Classification
-
Wirtschaft
Production, Pricing, and Market Structure; Size Distribution of Firms
- Subject
-
Exit
Option value
Irreversibility
- Event
-
Geistige Schöpfung
- (who)
-
Moretto, Michele
- Event
-
Veröffentlichung
- (who)
-
Fondazione Eni Enrico Mattei (FEEM)
- (where)
-
Milano
- (when)
-
1999
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Moretto, Michele
- Fondazione Eni Enrico Mattei (FEEM)
Time of origin
- 1999
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