Optimal Amount Of Investment Research Articles

Research on the Value Creation Mechanism of Green-Driven Products in the Internet+ Era

In order to improve the value of green-driven products, this paper studies the value creation mechanism of green-driven products in the Internet+ era. Under the framework of the classic Cournot output game, based on the bounded rationality assumption of the participants, this paper constructs a novel Cournot duopoly investment game model, and analyzes the dynamic adjustment mechanism of the participants' investment. The decision variable of participating enterprises is to select the optimal investment amount, and each production enterprise makes investment decisions in the next period according to the observed marginal profit of the current period to maximize the profit. Through calculation and analysis, it can be known that three boundary equilibriums and one interior point equilibrium of the discrete dynamic model system are obtained in this paper. The experimental analysis shows that the value creation mechanism of green-driven products proposed in this paper can effectively promote the value of green-driven products.

A sustainable inventory model for a two-echelon cold chain with green technology investments and stock-dependent demand under carbon emissions tax regulation

Cold chains are specialised supply chains that make use of refrigerated storage facilities and distribution nodes. Products that have to be stored and distributed via cold chains are temperature-sensitive items such as perishable food or vaccines. If these products are not maintained at the correct temperatures, their safety and quality may be comprised with dire consequences for end-users. Operating refrigerated storage units consumes a lot of energy and the majority of transportation trucks used for distribution are powered by fossil fuels and therefore, cold chains are a major source of carbon emissions. With this in mind, this paper proposes a sustainable inventory model for a two-echelon cold chain with stock-dependent demand and green technology investments under a carbon emissions tax regulation. The carbon tax is imposed by policy makers to encourage the cold chain to reduce its emissions whereas, the green technology investment is a voluntary measure taken by the cold chain to reduce its carbon emissions. Based on the results, a carbon tax regulation is about 3% more effective than a green technology investment in terms of profit maximisation potential. Moreover, when it comes to investing in green technologies, there is an optimal investment amount above which increasing the investment results in decreased profits and increased emissions. Other avenues that the cold chain can explore in effort to improve profitability include increasing the potential market size, displaying higher volumes of stocks, using larger capacity transportation trucks and filling the trucks to capacity.

Net zero retrofit of older tenement housing – The contribution of cost benefit analysis to wider evaluation of a demonstration project

The United Kingdom is legally committed to net zero by 2050; Scotland by 2045. How much will retrofitting older homes contribute to meeting net zero? What lessons can we learn from demonstrator projects? We present results from a social cost-benefit analysis of a demonstrator retrofit carried out on a Victorian tenement building in Scotland. The paper discusses the process and implications of this analysis, while also providing lessons learned from the wider evaluation. The cost-benefit analysis indicates that retrofitting provides better social value than demolition and new building in this project. However, the optimal amount of investment in retrofitting is sensitive to the assumptions made. Furthermore, the wider evaluation findings suggest it may be difficult to transport findings from any one setting to another. Local context matters.

The Cooperative Game Study of Chinese Overseas Direct Investment in the Construction of Green Ports

With the development of Chinese overseas direct investment (ODI) in green ports, a series of conflicts and contradictions among the participating parties have emerged, which in turn affect and hinder the process of project construction. This paper analyzes the current situation of Chinese ODI in green ports, constructs a cooperative game model between Chinese port investment enterprises and the host government with introduces the effort level, and selects three actual green port projects for calculation and analysis to show that Chinese ODI in green ports can bring economic and environmental benefits to both parties. It is found that the expected revenues and effort levels of both the Chinese port enterprises and the host government are positively correlated with each other’s effort levels, and there exists an optimal effort level and an optimal investment amount of the Chinese port enterprises to maximize the benefits obtained by both parties in the green port project. At the same time, the cases studied find that the benefits obtained by the host government are higher; Therefore, Chinese port investment enterprises can promote green ports projects by finding their own optimal effort level. Additionally, active cooperation is the optimal choice of the host government.

Optimal Sequential Investment Decision-Making with Jump Risk

This paper uses the real-option approach to find the optimal amount and time of investment in a real project. This approach is better than the net present value approach because it captures the uncertainty in the future expected cash flow. The real option has been applied to many industries; for example, oil and gas, telecommunications, and large-scale energy projects. The model introduced in this paper adds two features to the standard real options. The first feature is the two-stage investment. In reality, it is common for the project manager to not invest all budget at once. The second feature is the early termination event. The finding is that such a sudden death event causes the waiting period to be longer for both one-stage and two-stage investments. With low volatility, the lower optimal investment proportion of the total project budget is expected, when the mean arrival rate of the jump downside risk is higher. With medium or higher volatility, the higher optimal proportion is associated with a higher probability of jump risk. When the rate of one-time event is constant, volatility increases the optimal investment amount and increases the waiting time. The project has more value when the investment is divided into two stages rather than one stage. All other things being equal, the waiting time of one-stage is shorter than the waiting time of the first stage but longer than that of the second stage.

Role of government subsidies in the new energy vehicle charging infrastructure industry: a three-party game perspective

With the new round of scientific and technological revolution and industrial transformation, China has posited the direction of “new infrastructure” in 2020. As one of the seven major industries of the “new infrastructure”, the charging infrastructure (CI) industry not only supports the upgrade of the new energy vehicle industry but also provides developing platforms for emerging industries, such as wireless charging, energy storage, smart microgrid, and new energy consumption. Therefore, the government’s supporting role is crucial for the CI industry. To effectively explore the effectiveness of government’s subsidy policy in the CI industry and promote its healthy development, we employed a game model and discussed the government's evolution process of different game strategies between CI and battery-swapping station (BSS) operators in this study. First, China's government subsidies for the electric vehicle (EV) industry were classified into CIs and BSSs. The subsidies obtained by the CI operators were operating subsidies, whereas those obtained by BSSs were investment subsidies. Second, a game model was constructed, involving the government, operators, and users. The model used backward induction to seek the refined Nash equilibrium solution for CIs and BSS operators. The Nash equilibrium solution indicated that the optimal investment amount and BSS quantity of the operator were positively correlated with the government subsidy intensity. When the profitability of the operators increased and the amount of the subsidies increased, consumers’ willingness to use EVs increased and the policy effects were closely related to the benefits of government management. The decisions made by either the users or the operators were inversely related to the operators’ management efficiency. Besides, the subsidy policy was affected by the government management. Therefore, in the implementation stage of the government’s future subsidy policies, the government needs to innovate and improve management effectiveness. The government could use subsidy policies as a driving force for developing the CI industry to build a comprehensive ecosystem of the industry, which is also the next key point for the government to promote the development of the CI industry in the future.

ІНВЕСТИЦІЙНИЙ ПОТЕНЦІАЛ ПІДПРИЄМСТВ: СУТНІСТЬ, ЧИННИКИ ФОРМУВАННЯ ТА МЕТОДИ ОЦІНЮВАННЯ

Steady growth of the value of financial results of economic activity of enterprises requires ensuring their long-term economic development. Consequently, such provision requires the formation and realization of the economic development potential of economic entities. The magnitude of this potential is largely connected with the ability of enterprises to effectively invest in their development, ensuring its proper return. In other words, the potential for economic development of enterprises is largely based on their investment potential. Accordingly, the management of investment potential of economic entities is a necessary condition for accelerating their economic growth. However, the implementation of such management should be based on the prior establishment of the nature and factors of formation of existing and strategic investment opportunities of enterprises. Also important for the management of investment potential of enterprises is the selection of the most effective methods of its evaluation. Therefore, the purpose of this study is to clarify the nature, determine the factors of formation and select the most reasonable methods for assessing the investment potential of enterprises. It has been shown that this potential can be identified with the ability of the entity to act as an object of investment, providing the appropriate amount of economic efficiency of investments that shall be invested in it, at an acceptable level of risk of such investment. The grouping of factors of formation of investment potential of enterprises has been carried out, in particular, external and internal, and also primary and secondary factors have been allocated. Three main groups of methods for assessing the investment potential of economic entities have been considered, namely – those based on: assessing the financial condition of enterprises, the use of correlation and regression analysis and optimization calculations. It has been shown that the most reasonable approach to assessing the investment potential of enterprises is to determine the optimal amount of investment to ensure their economic development. The results of the study can be used by owners and managers of enterprises in developing investment programs for their activities.

Mortality Risk Management Under the Factor Copula Framework—With Applications to Insurance Policy Pools

Mortality risk is one of the core risks that life insurers undertake. The uncertain future lifetime of each insured represents one risk factor, and the dependence structure among these risk factors determines the aggregate risk of an insurance policy pool. We propose using factor copulas to describe the dependence structure among the future lifetimes of numerous insureds. This differs from Chen, MacMinn, and Sun (2015) in that their focus is on pricing the securities linked to several mortality indexes. To mitigate the systematic mortality risk associated with an insurance pool, the insurer may purchase an asset exposed to similar systematic risk. We thus set up a two-factor copula framework and solve for the optimal investment amount in the asset. In numerical illustrations, we employ real-case data from a life insurer and a life settlement market maker involving hundreds of policies.

Optimal investment decisions in lice-fighting technologies: A case study in Norway

The Norwegian salmon farming industry is currently facing significant obstacles to future growth. The major challenge is posed by the high level of sea lice in the sea nets at the salmon farms. At the moment both salmon farmers and the supplying industries are working on developing ways to deal with the sea lice problem so that the industry can continue the growth observed during the last decade. This work attempts to fill the lack of investment studies dealing with risk management related to the lice challenge, as well as analysis of investments in new technologies used to abate this problem. Specifically, we address a two-fold investment problem of an aquaculture firm. First, we find the optimal adoption timing of disruptive innovation that has the potential to offer a long-term solution to the lice problem and is subject to uncertain technology development. Second, we find the optimal investment amount in temporary lice-fighting measures. Our results indicate that the high investment cost causes the firm to wait relatively long before adopting the disruptive technology. Consequently, it invests a relatively large amount in short-term methods.

Optimal Preventive Law Enforcement and Stopping Standards

Preventive law enforcement increases social welfare by hindering the infliction of criminal harm, but produces inconvenience costs to the general public, because it requires interfering with the acts of innocents as well as attempters. The optimal amount of investment in preventive enforcement is greater than that which maximizes deterrence, but, smaller than that which minimizes criminal harm. Thus, ignoring preventive benefits and/or inconvenience costs results in an inefficient investment portfolio over enforcement methods, and in a predictable manner. Stopping standards, which determine the threshold suspicion required to trigger a stop, are tools that can be used to optimally trade-off the costs and benefits associated with preventive enforcement. The optimal stopping standard is weaker than its analogs in the trial context, namely standards of proof, which generally require preponderance of the evidence in civil trials and proof beyond a reasonable doubt in criminal trials. Finally, suspicionless stops can be optimal in a variety of circumstances, and are more likely optimal when enforcers perform poorly in forming suspicions; inconvenience costs are small; the population is unresponsive to deterrence measures; and the attempt rate is high.

Optimal Preventive Law Enforcement and Stopping Standards

Preventive law enforcement increases social welfare by hindering the infliction of criminal harm, but produces inconvenience costs to the general public, because it requires interfering with the acts of innocents as well as attempters. The optimal amount of investment in preventive enforcement is greater than that which maximizes deterrence, but, smaller than that which minimizes criminal harm. Thus, ignoring preventive benefits and/or inconvenience costs results in an inefficient investment portfolio over enforcement methods, and in a predictable manner. Stopping standards, which determine the threshold suspicion required to trigger a stop, are tools that can be used to optimally trade-off the costs and benefits associated with preventive enforcement. The optimal stopping standard is weaker than its analogs in the trial context, namely standards of proof, which generally require preponderance of the evidence in civil trials and proof beyond a reasonable doubt in criminal trials. Finally, suspicionless stops can be optimal in a variety of circumstances, and are more likely optimal when enforcers perform poorly in forming suspicions; inconvenience costs are small; the population is unresponsive to deterrence measures; and the attempt rate is high.

THE "INSURANCE EFFECT": HOW TO INCREASE THE INVESTMENT AMOUNT IN GREEN BUILDINGS - A MODEL-BASED APPROACH TO REDUCE THE ENERGY EFFICIENCY GAP

Real estate is an industry sector with high potential to increase energy efficiency. However, many of the existing green building investment opportunities (GBIO) are not utilized because economic valuation tools are complex and oftentimes difficult to understand. For this reason, we develop a formal, but comprehensible bottom-up model to determine the optimal investment amount from an economic perspective, placing particular emphasis on the descriptive valuation of risk, and point out the applicability of GBIO as insurance against energy price volatility. We also give examples of the model s potential application. Our work shows that considering the insurance effect will increase the optimal investment amount and that certain investment amounts lead to both economic and ecological benefits in properties and property portfolios. Our findings can be used for a comprehensible enhancement of existing valuation methods and tools to reduce the energy efficiency gap (EEG). They constitute a quantitative basis for the adaption of laws to counteract the current underinvestment in the real estate sector.

The influence of local government decision-making competition on enterprise innovation investment under information asymmetry and multiple risk appetite type

PurposeThis paper aims to analyze the impact of the degree of local government decision-making competition on the optimal investment amount, investment location and investment failure of innovative investment enterprise under multiple risk appetite type of innovative investment enterprise. This paper also points out three regulation paths that central government could use to avoid the influence of local government decision-making competition on the validity of enterprise innovation investment (EII).Design/methodology/approachBased on analysis frame of government competition about unitary government states, this paper builds duopoly decision model to analyze influence of local government decision-making competition on EII. Considering information asymmetry and multiple risk appetite type of decision-maker, this paper analyzes influence of local government decision-making competition on location selection, the optimal investment amount, identification of investment failure and exit mechanism of EII according to different relationship between reference points of local government decision-making competition and EII.FindingThe optimal investment amount of EII has positive correlation with risk appetite type of decision-maker, local government decision-making competition. Identification of investment failure and exit are divided into three phases. The boundary conditions are directly related to risk appetite type and amount of local government subsidy. Regional factor endowment and degree of preferential policy are main factors attracting enterprise investment. Local governments should analyze the interests of EII. There are three paths to avoid vicious competition among local governments: unified planning, revising of audit index, increasing penalties for failure of policies.Originality/valueWith rapid development of China's new urbanization process, urban economy has become an important carrier of economic development. Attracting foreign direct investment is an important measure to promote urban economic growth, and EII is the most important one. However new urbanization would lead to local government decision-making competition and then influence EII. Through analyzing influence of local government decision-making competition on EII, theory guidance could be provided to decision makers of innovation investment.

Enterprise security investment through time when facing different types of vulnerabilities

We propose in this work to use the utility theory to compute the optimal security investment over an investment horizon, considering the typologies and dynamic aspects of vulnerabilities related to the assets of a firm. A regression over a 17-year statistics available in the National Vulnerability Database is performed to predict and forecast the evolution of vulnerabilities’ rates over the investment horizon. Techniques and methodologies are proposed to compute and plan investment tranches over the whole time-horizon, while coping with budget constraints. An analysis is conducted to assess the variation of the optimal investments and the residual risk, taking into account the attitude of decision-makers towards risk. The obtained results show that : a) the optimal amount of investment in information security necessary to counter located attacks increases with the investment horizon for all types of vulnerabilities, but such an increase highly depends on the type of vulnerabilities affecting the firm; b) differently to located attacks, the optimal amount of investment in information security necessary to counter distributed attacks does not always increase with the investment horizon; and c) the optimal amount to invest in security, and the optimum value of the residual risk depend on the decision-maker attitude towards security risk.

Staged Venture Capital Investment considering Unexpected Major Events

This paper presents a dynamic model of capital financing, taking into consideration unexpected major events occurring within continuous time model. We are considering a special jump-diffusion model first described by Samuelson (1973) while using traditional geometric Brownian motion. This paper seeks to accurately show the innovative project valuation when unexpected major events occur and get the analytical results of the project option value. Furthermore, we analyzed the impact of multistaged financing; results indicated that both sources of uncertainty positively impact the project option value; particularly, the option price when considering unexpected major events occurrence is larger than the option price without unexpected major events. Based on a comparative-static analysis, new propositions for optimal amount of investment and optimal level of project are derived from simulations.

Improved Methods of Human Capital Valuation in the Modern Company

The purpose of this study is to develop a mechanism for the effective management of human capital value, in relation to the administrative staff of the modern organization. The paper proposes a method of optimizing the investment in human capital, which includes such components as expenses structuring in the formation and development of human capital, evaluation and orientation dynamics of the risks of the staff life-cycle phases, modelling optimal amount of investment in human capital development, taking into account the different degrees of riskiness, forecasting of return of human capital investment in managing positions and structural units, the development of recommendations for the creation of institutional mechanism to assess and control the cost of human capital. In general, the proposed method allows predicting the cost of human capital in managing positions and structural units, and planning the necessary level of the return of investment and developing measures for their optimization according to model-based estimates of investment in human capital, taking into account the change in the riskiness of the investment. The proposed technique is tested on the real project for the reorganization of the executive office, LLC

Economics of Information Security Investment Integrated with IDS and Attacker’s Behavior

ROSI (Return On Security Investment) has attracted a great deal of attention in recent years. By inheriting Gordon and Loeb 2002 security breach probability function, we present an adaptive economics model of investment in information security integrating dynamic characteristics of outside threat probability and detective mechanism, and deduce some guidelines for optimal investment amount.

Network-level optimization of pavement maintenance renewal strategies

Infrastructure systems in the US are in urgent need of maintenance and rehabilitation. According to the most recent factsheet published by the American Society of Civil Engineers, one of the top five infrastructure concerns of today in the US is the transportation system. The major challenge facing maintenance managers in state Departments of Transportation (DOTs) today is to preserve the road networks at an acceptable level of serviceability subject to the stringent yearly maintenance and rehabilitation (M&R) budgets. Maintenance managers must allocate such limited budgets among competing alternatives. Absence of simpler decision-making tools exacerbates the matter. This paper presents the development and implementation of a simpler, yet useful, network-level pavement maintenance optimization model, which is a Linear Program (LP) subject to budget constraints and the agencies’ pavement performance goals in terms of total lane-miles in each pavement condition state. A decision-making tool is developed using Frontline Systems’ Risk Solver Platform add-in for Microsoft Office Excel. This decision-making tool can compute the optimal amount of investment for each pavement treatment type in a given funding period. Pavement condition data pertaining to one of the Districts within a state DOT is used to test the model presented herein. Within this context, nine treatment types along with their corresponding unit prices ($/Lane-Mile), five pavement condition states, pavement deterioration rates, network-level pavement performance targets, and available annual maintenance budget for a 15-year planning horizon are defined. The results presented show how an annual highway maintenance budget needs to be allocated or determined to achieve the District’s value proposition for various scenarios. Comparing the results of these varying scenarios provides insight on long-term strategies and the impact of target constraints on budget expenditures.

Bail-Ins: Cyclical Effects of a Common Response to Financial Crises

In the wake of financial crises, public authorities often respond by using law to modify private contracts to transfer value from those who fare better in the crisis to those who fare worse. From the perspective of the crisis victim, this is a bailout. Because this article focuses on the perspective of the other party to the contract (specifically, on the incentives this response creates to that party), this article will refer to such responses as “bail-ins”. Recent examples include staying foreclosures, authorizing bankruptcy courts to modify mortgage terms, or threatening criminal prosecution to induce banks to undo transactions made with their clients. Bail-ins have greater political appeal than other forms of redistributive government action (e.g., increased government spending and taxation). Bail-ins are expected to reduce future investment, as investors fear similar actions in future crises. But how harmful is that? Market-skeptics question that the market correctly determines the optimal amount of investment, and are thus untroubled by government’s manipulation of it. And to appease those who do trust market allocation of investment, government can offset the investment reduction by subsidizing investment (e.g., making mortgage interest tax-deductable to encourage lending and offset the effects of staying foreclosures or of court-modified mortgage terms). This essay argues that bail-ins are significantly harmful from both market-trusting and market-skeptic perspectives. Rather than a permanent reduction in future investment, bail-ins reduce investment cyclically – significantly when the bail-in is imposed, but declining gradually as cognitive biases cause managers to underestimate the risk of future contract modifications and agency costs incentivize the managers to increase investment regardless of future bail-in risk. Cyclical fluctuation in investment deterrence may seem less harmful than permanent deterrence, but the opposite is true. As this essay explains, cyclical fluctuation of investment makes bail-ins harmful from the perspectives of both market-skeptics and market-trusters, and exacerbates the magnitude of future business cycles.

Optimal investment in sons and daughters when parents do not know the sex of their offspring

Optimal parental investment usually differs depending on the sex of the offspring. However, parents in most organisms cannot discriminate the sex of their young until those young are energetically independent. In a species with physical male–male competition, males are often larger and usually develop sexual ornaments, so male offspring are often more costly to produce. However, Onthophagus dung beetles (Coleoptera; Scarabaeidae) are highly dimorphic in secondary sexual characters, but sexually monomorphic in body size, despite strong male–male competition for mates. We demonstrate that because parents provide all resources required by their offspring before adulthood, O. atripennis exhibits no sexual size dimorphism irrespective of sexual selection pressure favoring sexual dimorphism. By constructing a graphic model with three fitness curves (for sons, daughters, and expected fitness return for parents), we demonstrate that natural selection favors parents that provide both sons and daughters with the optimal amount of investment for sons, which is far greater than that for daughters. This is because the cost of producing small sons, that are unable to compete for mates, is far greater than the cost of producing daughters that are larger than necessary. This theoretical prediction can explain sexual dimorphism without sexual size dimorphism, widely observed in species with crucial parental care such as dung beetles and leaf-rolling beetles, and may provide an insight into the enigmatic relationship between sexual size dimorphism and sexual dimorphism.