Competition, dedicated assets, and technological obsolescence in multistage infrastructure investments: A sequential compound option valuation

Yu-Lin Huang*, Chia Chi Pi

*此作品的通信作者

研究成果: Article同行評審

4 引文 斯高帕斯(Scopus)

摘要

Multistage investments are common in area-wide developments of privatized telecommunication networks and other complex infrastructure systems. They represent an incremental strategy that maintains flexibility in managing market risks, funding needs, and resource constraints in geographical expansions. Though compound options can be used to valuate multistage investments, their valuation is complex when the project in question requires upfront and interim investments in dedicated assets for future expansions. The problem becomes more complex when infrastructure markets are competitive and the investment in question is prone to rapid technological progress, which quickly makes the currently best in-use technology obsolete. This paper develops a European sequential compound call option pricing model to valuate multistage investments and analyze how competition, dedicated assets, and technological obsolescence influence the value of flexibility in this incremental strategy.

原文English
文章編號5475273
頁(從 - 到)141-153
頁數13
期刊IEEE Transactions on Engineering Management
58
發行號1
DOIs
出版狀態Published - 1 2月 2011

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