50th ANNIVERSARY ARTICLE: Option Pricing: Valuation Models and Applications
Management Science
Adoption timing of technology innovative investment project in economic rents perspective
International Journal of Information Systems and Change Management
The NGO's Dilemma: How to Influence Firms to Replace a Potentially Hazardous Substance
Manufacturing & Service Operations Management
Hi-index | 0.01 |
The paper presents a model that determines when (at which output price level) it is optimum for a firm to invest in environmental technologies and which are the main parameters that affect this decision. Our analysis shows that firms require high output price levels to be induced to invest in environmental technologies, because they optimally would not want to commit to a heavy irreversible investment that could turn out to be unprofitable in the event of a price fall. A comparative static analysis predicts that firms in industries with high output price volatility would be more reluctant to invest in environmental protection technologies and would be more willing to operate at low output levels (thus attaining low emission levels). Increases in the interest rate would also reduce optimal environmental investment levels.