Capital Investment Strategies under Uncertain Regulation
用期权定价模型解释受监管电力公司为何延迟投资、选择小型短周期技术，并分析放弃在建项目的决策，对理解不确定监管下的企业投资行为有参考价值。
This article presents a positive model of investment choices by regulated firms that offers rational explanations for electric utilities' recent behavior of delaying investment and choosing smaller, shorter-lead-time technologies. The model assumes thatfirms' capital investments require long lead times, during which the value of the completed project is uncertain. Firms anticipate regulatory profit and loss restrictions, but expectations about the value of a completed project change over time. Firms' decisions are modelled using an option pricing approach that incorporates the value of flexibility to delay or abandon projects. The article shows why rational firms invest in smaller, shorter-lead-time plants, or delay investment when faced with uncertain and asymmetric profit and loss restrictions. It also looks at decisions to abandon partially completed plants, and shows that the static result that a higher cost allowance on abandoned projects increases the incentive for investment is not generally true in a dynamic model.