Preventing Environmental Disasters in Investment under Uncertainty
研究企业在市场不确定性下投资可能造成环境损害的项目时，是否以及何时进行预防性投资。发现高收益、大环境风险或预防效果显著时，预防投资更可能发生，但会延迟项目投资；若允许先投资后预防，则会加速项目投资并增加预防投入。
Abstract The paper considers a firm that has the option to invest in a project with an unknown profitability, which is affected by general market uncertainty. The project has the adverse effect that it can cause environmental damage. In case the firm has the option to undertake preventive investment at the time of market entry, we get that preventive investment is significant when (i) the project revenue is large, (ii) the environmental incidents potentially cause a huge reduction of firm value, and (iii) when preventive investment substantially decreases the probability of environmental damage occurrence. The optimality of such a preventive investment results in a significant delay of the project investment. When the firm has the possibility to invest in the project first and do the preventive investment later, this will accelerate the project investment and will result in a larger preventive investment when it indeed will decide to do that one later.