Capital; Investment (including Inventories); Capacity

Horizontal Multinational Firms, Vertical Multinational Firms and Domestic Investment (Research Paper)

Emami Namini, J. — 2009-01-14T00:00:00Z

We build a dynamic general equilibrium model with 2 countries, horizontal and vertical multinational activity and endogenous domestic and foreign investment. It is found that horizontal multinational activity always leads to a complementary relationship between domestic and foreign investment. Vertical multinational activity, in contrast, leads to either a substitutional or complementary relationship between domestic and foreign investment, depending on the firms' technologies. We test the theoretical implications with a panel of U.S. multinationals and find empirical support.

Explaining the Energy-Efficiency Paradox. A Vintage Model with Returns to Diversity and Learning-by-Using: A Vintage model with returns to diversity and learning-by-using (Research Paper)

Groot, H.L.F. de — 2003-09-04T00:00:00Z

This paper studies the adoption and diffusion of energy-saving technologies in a vintage model. An important characteristic of the model is that vintages are modeled as being complementary: there are returns to diversity of using different vintages. We analyse how diffusion patterns and adoption behaviour are affected by complementarity and learning-by-using. It is shown that the stronger the complementarity between different vintages and the stronger the learning-by-using, the longer it takes before firms scrap (seemingly) inferior technologies. We argue that this is a potentially relevant part of the explanation of the energy-efficiency paradox. Furthermore we explore the effects of energy tax policies.

A vintage model of technology diffusion: The effects of returns to disversity and learning by using (Research Report)

Groot, H.L.F. de — 2003-09-04T00:00:00Z

The diffusion of new technologies is a lengthy process and many firms continue to invest in relatively old technologies. This paper develops a vintage model of technology adoption and diffusion that aims at explaining these two phenomena. Our explanation for these phenomena emphasises the relevance of complementarity between different vintages (or, alternatively, returns to diversity) and learning-by- using. The model is characterised by simultaneous investments in vintages of different quality and endogenously determined scrapping of old technologies. We show that the stronger the complementarity between different vintages and the stronger the learning-by-using, the longer it takes before firms scrap (seemingly) inferior technologies.

Optimal Continuous Order Quantity (s,s) Policies (Research Paper)

Bazsa, E.M. — 2001-10-16T00:00:00Z

The most recent optimization algorithm for (s, S) order policies with continuous demand was developed by Federgruen and Zipkin (1985). This was also the first efficient algorithm, which uses policy iteration instead of discretization. Zheng and Federgruen (1991) developed an even more efficient algorithm for computing discrete order quantity (s, S) inventory policies. Since the continuous case prohibits enumeration, this algorithm does not apply to continuous order quantity systems. In this paper an efficient algorithm for continuous order quantity (s, S) policies is developed. A marginal cost approach is used for determining the optimal s. Furthermore, we construct two aid functions (generated by the optimality conditions for s and S) , and exploiting their special properties a simple and efficient algorithm is obtained. The algorithm converges monotonically, such that at every iteration a policy improvement is obtained. Since every iteration finds a local minimum of the expected average cost, the number of iterations is at most N, where N < ? represents the number of local minimums. The algorithm also applies to discrete order quantity systems, in which case it basically reduces to the algorithm of Zheng and Federgruen (with the difference that in general our algorithm will take larger than unit steps, since we are not using enumeration).

Single Item Inventory Models (Research Paper)

Bazsa, E.M. — 2001-10-16T00:00:00Z

This paper extends a fundamental result about single-item inventory systems. This approach allows more general performance measures, demand processes and order policies, and leads to easier analysis and implementation, than prior research. We obtain closed form expressions for the Laplace transforms of the expressions of the performance measures, and with the help of an efficient inversion algorithm, the approximations of these cost and service measures are almost up to machine precision.

Taxes and Stimuli of Investment under Uncertainty (Article)

Pennings, H.P.G. — 2000-02-01T00:00:00Z

This article considers the effect on an irreversible investment of a subsidy to investment in combination with a taxation of future profits. It is shown that such a combination raising a zero expected revenue decreases the trigger value of investment. The tax rate for which the stimulus works at zero expected cost decreases as heterogeneity in the group of investors increases. The importance of the result is exemplified by the graduate tax.