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This study investigates the design of the royalty rate in a first-price auction across three types of investments … royalty rate for the three types of investments exhibits two different patterns. When investment is either incremental or … charge differential royalty rates for different types of investments. …
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We study optimal oil extraction strategy and the value of an oil field using a multiple real option appraoch. Extracting a barrel of oil is similar to exercising a call option and optimal strategies lead to deferring production when oil prices are low and when volatility is high. We sow that, in...
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