This paper provides a real option methodology for evaluating R&D investment opportunities assuming that potential competitors can en- ter in the market. As it is well known, R&D investments are made often in a phased manner and so each stage creates an opportunity (option) for subsequent...

The paper investigates the stability of the International Environmental Agreement in a model of emission reduction. We consider a two stage game, in which in the first stage each country decides whether or not to join the agreement while, in the second stage, the quantity of emissions reduction...

In this paper we study the formation and the stability of International Environmental Agreements (IEAs) in a pollution abatement model with a quadratic cost function. Countries play a two-stage game: in the first stage each country decides to join or not the coalition while, in the -second...

One of the problems of using the financial options methodolgy to analyse investment decisions is that strategic considerations become extremely important. So, the theory of real option games combines two successful theories, namely real options and game theory. The value of flexibility can be...

Cooperative investments in R&D are a significant driving force of the modern economy. As it well-known, the R&D investments are uncertain and the strategic alliances create synergies and additional information that increase the success probabilities about R&D projects. The theory of real option...

Exchange options give the holder the right to exchange one risky asset V for another risky asset D. The asset V is referred to as the optioned (underlying) asset, while D is the delivery asset. So, when an exchange option is valued, we generally are exposed to two sources of uncertainity, namely...