Real Options With Uncertain Maturity and Competition

Real Options, Debt Financing, and Competition

This paper investigates firm values and investment strategies (investment, coupon, and default timing) when several firms make strategic real investments with debt financing. We derive and compare the equilibrium investment strategies in three types of duopoly: (i) two symmetric firms, both of which can issue debt, (ii) two symmetric firms, only one of which (the leader) can issue debt, and (ii...

Real Options and Strategic Competition: A survey

A Real Options Analysis of Foreign Direct Investment Competition in a News Uncertain Environment

The relation between taxation states and foreign direct investment has been studied for several perspectives and with states of different levels of development. Usually it's only considered the impact of tax level on the foreign direct investment volume. This paper enhances this view by assuming that multinationals companies (MNC) can use transfer prices systems and have got investment timing f...

Mergers and market valuation: real options approach

This paper investigates the connection between market valuation anda type of the merger (stock, cash) using real options setup. I solveexplicitly for the timing and terms of cash mergers in two deferent settingsto demonstrate that cash mergers generally occur at low marketvaluations, whereas stock mergers that may be observed at both low andhigh valuations; the result holds with some dierences ...

Real Options and Competition: The Impact of Depreciation and Reinvestment

Applications of the real options approach hardly consider investment returns to be the result of competitive markets. The reason is probably that Dixit and Pindyck (1994, ch. 8) find that the investment triggers of firms in competitive markets are equal to those of firms with exclusive options. In this study, however, it is shown that this finding is restricted to markets in which assets have i...