The Value of Fighting Irreversible Demise by Softening the Irreversible Cost

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 ¯rm 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 e®ectiveness demanded from technology innovation.

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Year of publication:	2005
Authors:	Magis, P. ; Sbuelz, A.
Institutions:	Tilburg University, Center for Economic Research
Subject:	Double barrier options \| cost irreversibility \| demise irreversibility \| technology innovation

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Extent:	application/pdf
Series:	Discussion Paper.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series CentER Discussion Paper Number 2005-26
Classification:	G12 - Asset Pricing ; G13 - Contingent Pricing; Futures Pricing ; G31 - Capital Budgeting; Investment Policy
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011090631