The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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Optimal Sequential Investment When Capital is Not Readily Reversible
Published: 06/01/1982 | DOI: 10.1111/j.1540-6261.1982.tb02222.x
CARLISS Y. BALDWIN
When investment opportunities arrive one at a time and are reviewed sequentially, a corporation's optimal policy differs from a standard net present value rule if the corporation exercises control over an industry state variable and control is costly. The first condition presupposes a degree of market power for the firm; the second occurs if corporate investment decisions are imperfectly reversible.
Inflation, Uncertainty, and Investment
Published: 07/01/1986 | DOI: 10.1111/j.1540-6261.1986.tb04528.x
CARLISS Y. BALDWIN, RICHARD S. RUBACK
This paper investigates the effect of inflation on a firm's investments in fixed assets. When future prices are certain, inflation affects the present value of depreciation tax shields, and the impact of inflation on the choice between different lived assets is nonmonotonic. Future asset price uncertainty creates a valuable switching option and benefits shorter‐lived assets.