A well documented observation is that consumers (and also firms) use high implicit discount rates when deciding about energy conservation investments. This fact is almost universally labelled a 'market failure', which in turn has led many analysts (most famous Amory Lovins) to argue for either...

This paper investigates how uncertainty affects the optimal intertemporal accumulation of a stock externality using CO2 emissions and the greenhouse effect as a topical pars pro toto. More precisely, the evolution of the future temperature is assumed to follow an Ito-process with the drift...

In traditional portfolio theory, risk management is limited to the choice of the relative weights of the riskless asset and a diversified basket of risky securities, respectively. Yet in industry, risk management represents a central aspect of asset management, with distinct responsibilities and...

This paper shows that long debt maturities eliminate equityholders' incentives to reduce leverage when the firm performs poorly. By contrast, short debt maturities commit equityholders to such leverage reductions. However, shorter debt maturities also lead to higher transactions costs when...

This paper deals with real options literature by discussing an investment problem, where a firm has to determine optimal investment timing and optimal capacity choice at the same time under conditions of irreversible investment expenditures and uncertainty in future demand.