This paper studies the value and optimal timing for investment in finite-lived monopolies, extending the literature on real option games by considering the cases of random and certain-lived monopolies. Under these settings, firms face the risk of demonopolization, that can occur as a random or a...

We study the changes in the consumers' and producers' surplus associated with acquisition deals where there is a non-competition covenant that forbids the seller from re-entering the market over a given time period. We find that these acquisition deals can lead to significant negative (positive)...

We analyse how certain subsidies and guarantees given to private firms in public-private partnerships should be optimally arranged to promote immediate investment, in a real options framework. We show how an investment subsidy, a revenue subsidy, a minimum demand guarantee, and a rescue option,...

This paper studies how a pre-bid minority ownership (toehold) in the target firm can improve the acquirer’s position in the takeover process by reducing the information asymmetry. Using a dynamic real options approach to compare the takeover options (with and without a toehold), the bidder can...

This paper presents a real options model to value the option to invest in a new project, whose value is contingent on two multiplicative stochastic factors behaving accordingly to correlated geometric Brownian motions. A general sensitivity analysis is conducted highlighting the importance of...

In this paper we study the option to invest in a new airport, considering that the benefits of the investment behave stochastically. In particular, the number of passengers, and the cash flow per passenger are both assumed to be random. Additionally, positive and negative shocks are also...

Public-Private Partnerships (PPP) became one of the most common types of public procurement arrangements and Build-Own-Transfer (BOT) projects, awarded through adequate bidding competitions, have been increasingly promoted by governments and other public entities. The theoretical model herein...

Reaching an optimal mark-up value in the context of bidding competitions has been a research topic for more than 40 years. The model herein proposed aims to contribute to this debate by identifying and evaluating a specific real option: the option to sign the contract and perform the...

We present simple a model adequate for investment decisions in duopolies under total hidden competition. In this competitive context all potential entrants remain unrevealed until they decide to move into the market. The value-functions and the optimal entry thresholds are derived

The levels of uncertainty surrounding construction projects are particularly high and construction managers should be aware that adequately managing the effects of the different types of uncertainty may lead to an increase in the overall performance of construction companies. The model proposed...