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Irreversible Investment under Uncertainty: A Study of Nepalese Economy

Irreversible Investment under Uncertainty: A Study of Nepalese Economy

Suraj Gaudel

Journal Title:
Abstract


In most cases investment can often be irreversible. When firms decide about irreversible investment they may have confidence about their perceived probability measures describing future uncertainty. Generally, investment decision of an investor depends on his/her risk taking behavior, technology used and competition among the firms. More specifically, an increase in uncertainty decreases the value of an irreversible investment opportunity in the economy. The purpose of this paper is to analyses investment behavior in Nepal and to support entrepreneurial entry. Thus, increased uncertainty in the entrepreneur’s target will decrease the probability of entry in the new industry.

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