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This thesis considers the impact of tax policy uncertainty on firm level investment in wind power. I model the decision to invest as an irreversible investment with both price uncertainty and policy uncertainty. Tax policy uncertainty is introduced by a production tax credit that makes random discrete jumps. The model suggests that uncertain tax policy may decrease the time to investment and increase ... read morethe level of investment as firms concentrate investment in high tax credit periods. Policy uncertainty may also lead to decreased government tax revenues and have negative effects on the wind power industry. Further work remains to solve the model numerically to determine the precise effects of policy uncertainty.read less
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