A stochastic investment model for a survival conscious firm applied to shrimp fishing

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Abstract
An operational stochastic capacity expansion model for a survival conscious firm is developed and applied to shrimp fishing in which the entrepreneur evaluates all the information known to him at the time of decision. The results show the effect of survival considerations on the growth in net worth of a firm making sequential and irreversible purchases of physical capital with uncertain future yields. The survival model is applied to shrimp fishing on the Texas Gulf Coast and the reults are compared with those of a simple model in which survival is not considered. Bankruptcy could clearly result from use of the simple model; survival of the firm is guaranteed by use of the survival model.

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