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Author: Avinash Dixit

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Theoretical Economics Paper
Irreversible Investment with Uncertainty and Scale Economies

Avinash Dixit

This paper analyses optimal irreversible investment policy when profits are subject to a multiplicative geometric Brownian motion shock. The marginal product of capital is increasing initially and decreasing thereafter. ...Read more...

May 1992

Theoretical Economics Paper
The Art of Smooth Pasting (Now published in Fundamentals of Pure and Applied Economics 55 (Harwood Academic Publishers GbmH, Poststr. 22, 7000 Chur, Switzerland), 1993. ISBN: 3-7186-5384-2, ISSN: 0191-1708.)

Avinash Dixit

Many recent stochastic dynamic models in economics and finance are based on the theory of Brownian motion and its control or regulation. A heuristic exposition of this theory is presented with emphasis given to Itô's Lem...Read more...

1992