Quasi-option value and climate policy choices
نویسندگان
چکیده
منابع مشابه
Quasi-option value and climate policy choices
In the climate change issue, the environmental irreversibility (risk of an acceleration of mitigation policies if the worse happen) has to be balanced with the investment irreversibility (risk of over-cautious policies). To explore this balance, we define an option value for a precautionary climate policy. Using the simplest decision-making model, we expose how option value relates to the expec...
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We study the timing-of-extraction problem facing a decentralized mine owner when extraction entails environmental damage. As expected, when the environmental damage from mining is known, the socially optimal timing will depend on the magnitude of the damage relative to these costs in the rest of the world. But when environmental damage is uncertain, and these costs are revealed over time, a qua...
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Real investments involving irreversibility and ambiguity embed a positive quasi−option value under ambiguity (q.o.v.a.), which modifies the evaluation of an investment decision involving depletion of natural resources by increasing the value of delaying. Q.o.v.a. depends on the specific decision−maker attitude towards ambiguity, expressed by a capacity on the state space. An empirical measure o...
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In this paper we analyse the impact of policy uncertainty on foreign direct investment strategies. The paper follows the real options approach, which allows to investigate the value to a firm of waiting to invest and/or disinvest, when payoffs are stochastic due to political uncertainty and investments are partially reversible. Across the board we find that political uncertainty can be very det...
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The consistency and predictability of regulation is thought to be highly important for costly investment decisions. When the government lacks commitment power to maintain a promised policy, and firms are not perfectly competitive, investment levels are typically lower than when the government can commit. However, flexibility in policymaking is beneficial in that it allows for adjustment when co...
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ژورنال
عنوان ژورنال: Energy Economics
سال: 1998
ISSN: 0140-9883
DOI: 10.1016/s0140-9883(98)00011-5