Birth and death may be a better model than Brownian motion for many physical processes, which real options models will increasingly need to deal with. In this paper, we value a perpetual American call option, which gives the monopoly right to invest in a market in which the number of active...

This paper examines the foreign exchange (FX) hedging by firms listed on the Alternative Investment Market (AIM) in the UK to contribute to the empirical debate on the determinants of the FX hedging. Despite our selection criteria that all our firms have exposure to FX risk, we find that only...

Acting as the source of exogenous illiquidity, trading constraints prevent free trading of shares and discount their value relative to freely traded counterparts with identical dividends and voting rights. This paper numerically solves the theoretical illiquidity discounts for the restricted...

We analyze the incentives of firms to delay patenting a product they intend to commercialize to maximize the period they can exploit the market under patent protection. We model the patenting and market-launching decisions and consider partial financing of these costs with debt. Agency conflicts...

Battery electric vehicles (BEVs) could be key to decarbonizing transport, but are heavily subsidized. Most assessments of BEVs use highly taxed road fuel prices and ignore efficient pricing of electricity. We use efficient prices for transport fuels and electricity, to judge what battery costs...

The European Commission’s Target Electricity Model aims to integrate EU electricity markets. This paper estimates the potential benefit to the EU of coupling interconnectors to increase the efficiency of trading day-ahead, intra-day and sharing balancing services efficiently across borders....