TITLE:
Does Immigration Promote the Investment of the Monopolistic Firm?
AUTHORS:
Yasunori Fujita
KEYWORDS:
Optimal Stopping Theory, Geometric Brownian Motion, Value of Waiting, Immigrants, Monopolistic Power over Labor Market
JOURNAL NAME:
Modern Economy,
Vol.8 No.3,
March
21,
2017
ABSTRACT: In the present paper, we examine the effect of
increasing uncertainty of immigrants’ growth on the optimal timing of
investment of a firm that has a monopolistic power over the labor market. It is
revealed that when the uncertainty of immigrants’ growth is more than a
threshold level, increasing uncertainty of immigrants’ growth accelerates the
optimal timing of firms’ investment and enhances the economic growth, even if
the uncertainty of immigrants’ growth is formulated by the geometric Brownian
motion, which is in sharp contrast to the standard result that an increase in
the uncertainty postpones the optimal timing.