Saphores, Jean-Daniel; Gravel, Eric; Bernard, Jean-Thomas - In: Journal of Regulatory Economics 25 (2004) 2, pp. 169-186
Using real options, we consider a firm that must undergo a costly and time-consuming regulatory process before making an irreversible, lagged investment whose value varies randomly. We apply our model to Hydro-Québec's proposal to build a 1,250 megawatts interconnection with Ontario. We find...