Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5053506 | Economic Modelling | 2016 | 11 Pages |
â¢This paper analyzes the firm's investment and hiring/firing optimal policies.â¢It provides a general result when the market demand is mean reverting.â¢This allows the extension of Tserlukevich (2008) and Letifi and Prigent (2014).â¢We analyze the impact of the mean-reverting parameters on both the growth and decay options.
We analyze the firm's investment and hiring/firing optimal strategies when the market demand is mean reverting and with potential decision reversibility. In this framework, we determine the values of both investment and hiring/firing growth and shutdown options. This allows the extension of Tserlukevich (2008) and Letifi and Prigent (2014) when taking account of a mean reverting demand. We analyze the quasi-explicit solutions for the optimal firm's value, especially the influence of mean-reverting parameters on both the growth and decay options.