The value of fighting irreversible demise by softening the irreversible cost

Paul Magis, Alessandro Sbuelz

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

We study a novel issue in the real-options-based technology innovation literature by means of double barrier contingent claims analysis. We show how much a firm with the monopoly over a project is willing to spend in investment technology innovation that softens the irreversible cost of accessing the project before its irreversible demise. The answer depends on the project's characteristics and on the effectiveness demanded from technology innovation.
Original languageEnglish
Pages (from-to)503-516
Number of pages14
JournalInternational Journal of Theoretical and Applied Finance
Volume9
DOIs
Publication statusPublished - 2006

Keywords

  • Cost irreversibility
  • Demise irreversibility
  • Double barrier options
  • Technology innovation

Fingerprint

Dive into the research topics of 'The value of fighting irreversible demise by softening the irreversible cost'. Together they form a unique fingerprint.

Cite this