This paper studies optimal investment in sunk assets for a ̄rm facing uncertain future demand and costs. The investment problem is decomposed into decisions over scale and timing which are in°uenced by convex adjustment costs and the feasibility of delaying investment. The value of the resulting real option to delay behaves as expected in response to increases in demand and cost uncertainty but...

This paper provides the first study on the impact of noise barriers on the price of adjacent houses based on a repeat sale analysis (RSA). RSA allows us to empirically examine the differential between the prices of houses sold before and after an event that may have affected their value, and after other relevant variables such as the evolution of the real estate market and major renovations per...

PURPOSE We conducted a study of the daily cost of various ophthalmic solutions used in Japan for treating glaucoma: beta-adrenergic blockers (11 products), epinephrine (3), cholinergics (3), prostaglandins (2), and carbonic anhydrase inhibitors (2). METHODS The total number of drops in one bottle of each solution was counted drop by drop. The cost per drop was calculated by dividing the gover...

– In this paper, we are interested in American option prices in the Black–Scholes model. For a large class of payoffs, we show that in the region where the European price increases with the time to maturity, this price is equal to the American price of another claim. We give examples in which we explicit the corresponding claims. The characterization of the American claims obtained in this way ...

T he objective of this study is using the Markov Switching Vector Autoregressive method and regime dependent impulse response functions to measure the pass-through of world food prices to consumer price index in Iran from 1990 to 2013. With respect to information criteria and the log-likelihood ratio statistic, MSIA(2)-VAR(1) model has a better fit to data than other models. The magn...

Economic intuition suggests that increased competition generates lower prices. However, recent theoretical work shows that a monopolist may charge a lower price than a firm facing a competitor selling a differentiated product. The direction of the price change when competition is introduced is dependent upon the joint distribution of buyer values for the two products. We explore this relationsh...

This paper considers a discrete-time Markovian model of asset prices with economic factors and transaction costs with proportional and fixed terms. Existence of optimal strategies maximizing average growth rate of portfolio is proved in the case of complete and partial observation of the process modeling the economic factors. The proof is based on a modification of the vanishing discount approa...

In this article we report an experiment that examines how demand-side bidding can discipline generators in a market for electric power. First we develop a treatment without demand-side bidding; two large firms are allocated baseload and intermediate cost generators such that either firm might unilaterally withhold the capacity of its intermediate cost generators from the market to benefit from ...

The collection of personal data in business-to-consumer transactions and respecting the consumers’ privacy preferences are fundamentally competing goals. This paper studies the effects of emerging user-controlled privacy-enhancing technologies on supply-side decision making with respect to technology adoption and pricing strategies. In particular, identity management systems that allow buyers t...