Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 505: Options, Timing, and Regional Entry of Firms

Elisabet Berglund ()
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Elisabet Berglund: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

Abstract: This paper studies how the possibility to postpone the unrecoverable entry and location cost affects regional entry when post-entry earnings are uncertain. We find that the opportunity cost to enter today is higher when entering a region with high uncertainty relative to a region with low uncertainty.

Keywords: Timing; Regional uncertainty; Brownian motion

JEL-codes: C61; D21; D84; R12

13 pages, April 21, 1999

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