A renewable energy asset manager can expand the power generation capacity of a particular site by an endogenous amount but may also want to shut down the location to save on fixed operating costs if the market prospects deteriorate. The site manager does not exercise these real options in a set...

Risk-averse entrepreneurs contract with financiers to fund their projects. Projects can be operated under green or dirty technologies. We explore the role of limited commitment in determining the adoption of green technologies when governments enact carbon taxes and/or directed investment...

Research contributions providing insights at the intersection of real options analysis and industrial organization have become numerous in the recent decade. In the present paper, we provide an overview aimed at categorizing and relating these research streams. We highlight managerial insights...

Strategic interactions are part of business life. We model a situation where several firms may enter the market at a future time and compete with invested rivals in quantity. In the second-stage dynamic Cournot model, firms have operational flexibility to set output in the face of competition...

This paper studies incentives in a dynamic contracting framework of a levered firm. In particular, the manager selects long-term and short-term efforts, while shareholders choose initially optimal leverage and ex-post optimal default policies. Notably, a resource constraint that binds the...

We propose a theoretical framework, supplemented by empirical evidence, to study how household financial leverage affects labor skills acquisition and labor supply. Unlike labor income, acquired skills are inseparable from individuals and do not accrue to creditors at default, thus making them...