scholarly journals Oil volatility and the option value of waiting: An analysis of the G-7

2010 ◽  
Vol 31 (7) ◽  
pp. 679-702 ◽  
Author(s):  
Don Bredin ◽  
John Elder ◽  
Stilianos Fountas
Keyword(s):  
Option Value ◽  
Option Value Of Waiting

scholarly journals ENVIRONMENTAL INNOVATION, WAR OF ATTRITION AND INVESTMENT GRANTS

2010 ◽  
Vol 12 (01) ◽  
pp. 37-59 ◽  
Author(s):  
CESARE DOSI ◽  
MICHELE MORETTO
Keyword(s):  
Technological Change ◽  
Incomplete Information ◽  
Switching Costs ◽  
Pollution Abatement ◽  
Cost Effective ◽  
Option Value ◽  
Environmental Innovation ◽  
War Of Attrition ◽  
Public Subsidies ◽  
Option Value Of Waiting

The paper analyses the timing of spontaneous environmental innovation when second-mover advantages, arising from the expectation of declining investment costs, increase the option value of waiting created by investment irreversibility and uncertainty about private payoffs. We then focus on the design of public subsidies aimed at bridging the gap between the spontaneous time of technological change and the socially desirable one. Under network externalities and incomplete information about firms' switching costs, auctioning investment grants appears to be a cost-effective way of accelerating pollution abatement, in that it allows targeting grants instead of subsidizing the entire industry indiscriminately.

Nonlinearities in Interregional Migration Behavior

2016 ◽  
Vol 40 (6) ◽  
pp. 563-589 ◽  
Author(s):  
Roberto Basile ◽  
Jaewon Lim
Keyword(s):  
Wage Differentials ◽  
The United States ◽  
Decision Criterion ◽  
Migration Decision ◽  
Migration Behavior ◽  
Option Value ◽  
Interregional Migration ◽  
Migration Flows ◽  
Option Value Of Waiting ◽  
Alternative Theories

Traditional “Marshallian” theories predict a linear relationship between internal migration and regional wage differentials. Using panel data on gross place-to-place migration flows in the United States, we estimate a semiparametric version of the modified gravity model and find evidence of a nonlinear effect of wage differentials in line with alternative theories of interregional migration, including the “option value of waiting” theory, liquidity constraints, and wealth-conditioned immobility. Traditionally, the migration decision process is believed to be mainly composed of two criteria: “whether to move” and “where to move.” However, the empirical evidence of nonlinearity found in this study supports the potential presence of another important decision criterion, “when to move” on interregional migration.

Real Options, Conflicting Valuations, and Favoritism

2003 ◽  
Vol 3 (1) ◽  
Author(s):  
Anil Arya ◽  
Jonathan Glover
Keyword(s):  
Real Options ◽  
Option Value ◽  
Optimal Assignment ◽  
Assignment Rule ◽  
Fair Assignment ◽  
Option Value Of Waiting

Abstract In this paper, limited managerial capacity gives rise to a timing option: agents can implement projects now-or-later. Because each agent cares only about the project he implements, while the principal cares about the projects undertaken in aggregate, the timing option may be valued differently by the principal and the agents. Under a fair assignment rule (one that treats the agents symmetrically), these conflicting valuations result in agents sometimes not implementing the principal's desired projects. We identify conditions under which the optimal assignment rule necessarily exhibits favoritism. Favoritism is beneficial because it provides appropriate incentives to the unfavored agent by reducing his option value of waiting.

Crude by Rail, Option Value, and Pipeline Investment

2017 ◽  
Author(s):  
Thomas R. Covert ◽  
Ryan Kellogg
Keyword(s):  
Option Value
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