The value of fighting irreversible demise by softening the irreversible cost

Alessandro Sbuelz, Paul Magis

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review

1 Citazioni (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.
Lingua originaleEnglish
pagine (da-a)503-516
Numero di pagine14
RivistaInternational Journal of Theoretical and Applied Finance
Volume9
DOI
Stato di pubblicazionePubblicato - 2006

Keywords

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

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