This paper introduces incomplete information and preemption into an equilibrium model of ÿrms facing real investment decisions. The optimal investment strategy may lie anywhere between the zero-NPV trigger level and the optimal strategy of a monopolist, depending on the distribution of competitors'
✦ LIBER ✦
To kill a real option – Incomplete contracts, real options and PPP
✍ Scribed by Niclas A. Krüger
- Book ID
- 116927093
- Publisher
- Elsevier Science
- Year
- 2012
- Tongue
- English
- Weight
- 984 KB
- Volume
- 46
- Category
- Article
- ISSN
- 0965-8564
No coin nor oath required. For personal study only.
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To have a real option means to have the possibility for a certain period to either choose for or against making an investment decision, without binding oneself up front. The real option rule is that one should invest today only if the net present value is high enough to compensate for giving up the