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Contribution Details

Type Journal Article
Scope Discipline-based scholarship
Title Analyzing firms' strategic investment decisions in a real options' framework
Organization Unit
Authors
  • Pascal Botteron
  • Marc Chesney
  • Rajna Gibson-Asner
Item Subtype Original Work
Refereed Yes
Status Published in final form
Language
  • English
Journal Title Journal of international financial markets, institutions & money
Publisher Elsevier
Geographical Reach international
ISSN 1042-4431
Volume 13
Number 5
Page Range 451 - 479
Date 2003
Abstract Text Within the context of investment under uncertainty, the real options literature has led to models that capture primarily the time to wait flexibility of monopolistic corporations' investment decision. In this paper, we propose an approach which relies on barrier options to model production and/or sales delocalization flexibility for multinational enterprises making decisions under exchange rate uncertainty. We then extend the model by introducing game theoretic considerations to show how the information set and the competitive structure of the market may lead firms to act strategically and exercise their delocalization options preemptively at an endogenously fixed exchange rate barrier.
Digital Object Identifier 10.1016/S1042-4431(03)00018-0
Other Identification Number merlin-id:13222
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