Volume flexibility and capacity investment: a real options approach

This paper considers the investment decision of a firm where it has to decide about the timing and capacity. We obtain that in a fast-growing market, right after investment the firm produces below capacity, where the utilization rate (the proportion of capacity that is used for production right after the investment) increases with market uncertainty for a very big market trend, and shows no monotonicity for a moderately large market trend. On the other hand, we get that, for a slowly growing or shrinking market, the firm produces up to capacity right after investment. In the intermediate case, the firm produces up to capacity right after investment when uncertainty is low and below capacity when uncertainty is high, whereas the utilization rate decreases with the market uncertainty.     

Capital Accumulation and Embodied Technological Progress

This paper combines technology adoption with capital accumulation taking into account technological progress. We model this as a multi-stage optimal control problem and solve it using the corresponding maximum principle. The model with linear revenue can be solved analytically, while the model with market power is solved numerically. We obtain that investment jumps upwards right at the moment that a new technology is adopted. We find that, if the firm has market power, the firm cuts down on investment before a new technology is adopted. Furthermore, we find that larger firms adopt a new technology later.     

Uncertainty and stepwise investment

We analyze the optimal investment strategy of a firm that can complete a project either in one stage at a single freely chosen time point or in incremental steps at distinct time points. The presence of economies of scale gives rise to the following trade-off: lumpy investment has a lower total cost, but stepwise investment gives more flexibility by letting the firm choose the timing individually for each stage. Our main question is how uncertainty in market development affects this trade-off. The answer is unambiguous and in contrast with a conventional real-options intuition: higher uncertainty makes the single-stage investment more attractive relative to the more flexible stepwise investment strategy.     

Geometry and Forces in Relativistic and Pre-Relativistic Theories

It has been shown elsewhere that in the case of relativistic theories, there exists a local differential-topological criterion which distinguishes sharply between geometry and forces. This criterion is also epistemologically effective. In this paper, we explain why this local criterion fails in the pre-relativistic context. The principal reason for the difference is that the causal structure is determined by a quadratic function of 3-velocity in the relativistic case and by a linear function of 3-velocity in the pre-relativistic case.     

Optimal Double Stopping Problems for Maxima and Minima of Geometric Brownian Motions

Methodology and Computing in Applied Probability - We present closed-form solutions to some double optimal stopping problems with payoffs representing linear functions of the running maxima and...     

Asymmetric Information in a Capital Accumulation Differential Game with Spillover and Learning Effects

Journal of Optimization Theory and Applications - This paper considers a capital accumulation game where the installation costs of investments are lowered by the firm’s own capital stock...     

Effects of pollution restrictions on dynamic investment policy of a firm

The purpose of this paper is to determine the effects of different pollution standards on the firm's resource allocation decisions. To do so, a dynamic model of the firm is developed in which it is assumed that production causes pollution as an inevitable byproduct. Concerning its investment policy, we suppose that the firm can choose between investing in productive capital goods and investing in abatement efforts.It is shown that, in some cases, future abatement expenses have a negative impact on the present level of productive investment, even if the pollution standard is not binding at the moment. This implies a really dynamic optimal investment policy for the firm, which cannot be obtained within a comparative static analysis.This research has been made possible by a fellowship of the Royal Netherlands Academy of Arts and Sciences. Comments by Frank van der Duyn Schouten and Piet Verheyen (Tilburg University) and by Raymond Gradus (Dutch Ministry of Finance, The Hague) are gratefully acknowledged.     

Profiling of erythropoietin products by capillary electrophoresis with native fluorescence detection

The potential of CE with native fluorescence detection (Flu) for the profiling of the therapeutic protein erythropoietin (EPO) was studied. EPO is a highly heterogeneous glycoprotein comprising a large number of isoforms. CE was applied to induce separation among the various glycoforms. Native Flu of EPO provided high detection selectivity yielding good signal‐to‐noise ratios and stable baselines, particularly when compared to conventional UV absorbance detection. In order to enhance EPO isoform resolution, CE was performed using a capillary with a neutral coating in combination with a simple BGE of 2.0 M acetic acid (pH 2.1). CE‐Flu analysis of the EPO biological reference preparation of the European Pharmacopeia resulted in a highly detailed glycoform profile. Migration time RSDs for selected EPO isoforms were less than 0.22% and 0.80% for intraday and interday repeatability, respectively. RSDs for relative peak intensity of the major EPO isoforms were less than 3%. The achieved resolution, migration time stability, and sensitivity allowed discrimination of different EPO products (EPO‐α and EPO‐β) based on the recorded glycoform pattern. The developed CE‐Flu method is relatively straightforward, and shows potential for quality control in biopharmaceutical production.