Some general results about the optimal timing of relocation
Year: 2008
Type: report
Abstract: In this paper we derive general results concerning the optimal switching level in the problem of the optimal relocation policy for a firm that faces two types of uncertainty: one about the moments in which new (and more efficient) sites will become available; and the other regarding the degree of efficiency improvement inherent to each one of these new, yet to be known, potential location places. In particular, we note that the optimal switching level depends on the distribution of the degree of efficiency improvement only through an expected value. Impacts on the final results driven by the characteristics of the firm’s original location site, the market environment and the way in which risk is modelled are studied numerically. The overall results are in line with economic intuition.
Authors: José Pereira, Gualter Couto, Cláudia Nunes
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2166971746