This paper examines the effect of competition on the irreversible investment decisions under uncertainty as a generalization of the "real option" approach. We examine this issue with reference to an industry where each firm has only one investment opportunity which is completely irreversible and...

In this article we analyse the effects of different regulatory schemes (price cap and profit sharing) on a firm's investment of endogenous size. Using a real option approach in continuous time, we show that profit sharing does not affect a firm's start-up decision relative to a pure price cap...

The purpose of this paper is to analyze the influence of uncertainty on the value of real options while allowing for a possible change in the value of the underlying asset. We show that the proposition of a strictly positive influence of uncertainty does not hold, if the value of the underlying...

Questioning the underlying assumptions of the process of creative destruction, we conceptualize an alternative process of creative construction that may characterize the dynamics between entrants and incumbents. We discuss the underlying mechanism of knowledge spillover strategic...

In this article, we analyse the optimal investment decision in a new health care technology of a representative hospital that maximises its surplus in an uncertain environment. The new technology allows the hospital to increase the quality level of the care provided, but the investment is...

Property in financial options (derivatives) is stated and transferred through contracts, while in real options property may arise from assets under the management of the firm, without a formal contract properly defining property. Furthermore, in some situations the asset can be public, and its...