Showing 1 - 10 of 13
In April 2012, Delta Air Lines (Delta) purchased a mothballed oil refinery. We use this case to illustrate when, how, and why vertical integration can hedge input price risk. First, we show that stockholders and creditors expected the move to create wealth. Consistent with their predictions,...
Persistent link: https://www.econbiz.de/10012902662
We study how investors in a conservative Muslim society react to announcements of bank loans depending on their compliance with Shari'a law. We hand-collect 173 announcements of bank loans granted to listed corporations in Saudi Arabia, assess their issuance and estimate the reaction of the...
Persistent link: https://www.econbiz.de/10012944314
Persistent link: https://www.econbiz.de/10010189094
We show how in Saudi Arabia, a country that relies heavily on crude oil exports, negative shocks in crude oil prices significantly impact households’ decisions to invest in education. Specifically, we find that the oil down cycle that started in the second half of 2014 compelled parents to...
Persistent link: https://www.econbiz.de/10014241061
The optimal management of a non-renewable resource extraction project is studied when input and output prices follow correlated stochastic processes. The decision problem is specified by two Bellman equations describing the project when it is currently operating or mothballed. Solutions are...
Persistent link: https://www.econbiz.de/10010691442
This paper examines the strategic interactions of two large regions making choices about greenhouse gas emissions in the face of rising global temperatures. A focus is on three central features of the problem: uncertainty, the incentive for free riding, and asymmetric characteristics of decision...
Persistent link: https://www.econbiz.de/10012899158
This paper develops a model of a profit maximizing firm with the option to exploit a non-renewable resource, choosing the timing and pace of development. The resource price is modelled as a regime switching process, which is calibrated to oil futures prices. A Hamilton-Jacobi-Bellman equation is...
Persistent link: https://www.econbiz.de/10012938381
This paper uses a real options approach to examine the impact of ramping rate restrictions imposed on hydro operations to protect aquatic ecosystems. We consider the effect on profits from electricity generation in order to inform policy decisions about ramping rate restrictions. A novelty of...
Persistent link: https://www.econbiz.de/10013043110
This paper investigates whether convenience yield is an important factor in determining optimal decisions for a forestry investment. The Kalman filter method is used to estimate three different models of lumber prices: a mean reverting model, a simple geometric Brownian motion and the two-factor...
Persistent link: https://www.econbiz.de/10012917202
Large water demands by the mining industry are of increasing concern around the world. The cost of a specific water management regulation is studied for an oil sands mining operation in Canada, where restrictions on water withdrawals vary with fluctuations in the river. A stochastic optimal...
Persistent link: https://www.econbiz.de/10013216333