In this article we price a precipitation option based on empirical weather data from Germany using different pricing methods, among them Burn Analysis, Index Value Simulation and Daily Simulation. For that purpose we develop a daily precipitation model. Moreover, a de-correlation analysis is...

The relationship between price uncertainty and specific investment is examined in a dynamic model that integrates the theories of real options and investment holdup. Because of weak contract enforcement, bilateral firms cannot use a contract to govern their bilateral investment and exchange...

As long as total effort cannot be completely controlled, a more thorough understanding of fishers' supply response decisions will be beneficial for fisheries managers. In this paper, we present a model of fishers' gear choice, which is empirically estimated on a panel of Swedish demersal...

The extent to which crop insurance programs have resulted in additional land being brought into production has been a topic of considerable debate. We extend a multi-equation structural model of crop acreage response, insurance participation, CRP enrollment, and input usage developed in Goodwin...

Most studies measuring asymmetric adjustments in vertical price transmissions fail to provide empirical support to explain such behavior. The literature invokes theoretical models, which derive asymmetric behavior based on variables that are difficult to measure such as oligopolies' coordination...

The validity of the utility concept, particularly in an expected utility framework, has been questioned because of its inability to predict revealed behavior. In this paper we focus on the global shape of the utility function instead of the local shape of the utility function. We examine the...

This study determines the entry and exit thresholds of table grape farming with irreversible investment under uncertainty. Real option approach is adopted to consider the investment and management flexibility. Also revenue insurance is introduced to consider the effect of the risk management...

This paper develops a framework to link the expected utility analysis to real options models in order to capture the joint effects of risk aversion and irreversibility associated with real investments. It aims at modifying the theory of investment under uncertainty by incorporating decision...

The volatility of agricultural markets has increased remarkably in recent years. In spite of this, the way in which supply chain actors perceive market volatility has only rarely been analyzed. This paper seeks to close this research gap by presenting empirical findings about how the volatility...

The risks associated with farming activities are likely to increase in the future. It, therefore, appears worthwhile to analyse new risk management instruments. This paper investigates weather derivatives for which a market has already emerged in the USA. Contrary to traditional financial...