Timing of Investment and Dynamic Pricing in Privatized Sectors

Ornella Tarola and Sandro Trento

No 1005, DISA Working Papers from Department of Computer and Management Sciences, University of Trento, Italy

Abstract: Firms in equipment-intensive sectors, where investment in production is performed at diminishing marginal cost, spend billions of dollars in equipment and production capacity. Typically, this expenditure is induced by either the replacement of existing equipment, which deteriorates with age and can result in higher operating costs and lower production capacity, or further investment, to benefit from any technological improvement embedded in new equipment. We identify the optimal price policy, and the ensuing optimal sequence of investment timing a privatized firm selects through time and compare them with choices made at the time when such a type of firm was under public-ownership.

Keywords: planning investment; dynamic programming; economic behavior; privatization (search for similar items in EconPapers)
JEL-codes: D21 L21 L23 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2010-10, Revised 2010-10-20
New Economics Papers: this item is included in nep-ind
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.unitn.it/files/download/10528/05.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.unitn.it/files/download/10528/05.pdf [302 Found]--> https://www.unitn.it/files/download/10528/05.pdf)

Related works:
Working Paper: Timing of Investment and Dynamic Pricing in Privatized Sectors (2012)
Working Paper: Timing of Investment and Dynamic Pricing in Privatized Sectors (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:trt:disawp:1005

Ordering information: This working paper can be ordered from
DISA Università degli Studi di Trento via Inama, 5 I-38122 Trento TN Italy
http://www.unitn.it/disa

Access Statistics for this paper

More papers in DISA Working Papers from Department of Computer and Management Sciences, University of Trento, Italy Contact information at EDIRC.
Bibliographic data for series maintained by Roberto Gabriele ().