This paper considers investment problems in real options with non-homogeneous two-factor uncertainty. We derive some analytical properties of the resulting optimal stopping problem and present a finite difference algorithm to approximate the firm’s value function and optimal exercise boundary....

This paper considers investment problems in real options with non-homogeneous two-factor uncertainty. It shows that, despite claims made in the literature, the method used to derive an analytical solution in one dimensional problems cannot be straightforwardly extended to problems with two...

As becomes apparent from the standard text books in industrial organization (cf. Tirole, 1988, The Theory of Industrial Organization), the analysis of the effects of uncertainty within this field is yet underdeveloped. This paper shows that the new theory of strategic real options can be used to...

Carbon Capture and Storage (CCS) and Carbon Capture and Utilization (CCU) are considered essential solutions to reduce greenhouse gas (GHG) emissions worldwide. A crucial difference between the two is that CCS is already a mature technology, while CCU is still in the R&D phase. Hence, firms are...