Policy Seminars
| Speaker: Laura Kornish |
| Speaker's Website: |
| Topic: Investments in Competing Standards |
| Date/Place/Time: Nov. 15, 2002 / Cornell Hall, D-313 / 10:30-11:50 am |
| Abstract: In this work, I investigate optimal allocation of funds between “real” (i.e., non-financial) projects in which there can be non-constant returns to scale, probabilistic dependence, and opportunities for information gathering. In particular, I explore the case of projects that depend on competing standards. Standards produce positive network effects and therefore create environments in which there are (1) increasing returns to scale (IRTS) and (2) a negative relationship between the successes of different technologies. Consistent with the literature, we find that in a single period, allocations to IRTS projects are all-or-nothing rather than balanced allocations. However, in a multi-period setting with information gathering possibilities, the results are different. Because information gathering can be a decreasing returns to scale activity, balanced allocations in the earlier stages are possible. |
| Link to paper (if available): |
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