Comparative-statics results for financial options are often assumed to hold for real options. But the effects of higher volatility need not be increased value and postponed investment. This depends on signs of correlations and what parameters are held constant. For real options, the...

Comparative-statics results for financial options are often assumed to hold for real options. But the effects of higher volatility need not be increased value and postponed investment. This depends on signs of correlations and what parameters are held constant. For real options, the...

We explore the implications for asset prices and implied volatilities in an equilibrium model of commodity production. Production of the commodity can be carried out in one of two regimes. In the first regime the reserves are set in constant decline while in the second regime new additions to...

We value two real options related to offshore petroleum production. We consider expansion of an offshore oil field by tying in a satellite field, and the option of early decommissioning. Even if the satellite field is not profitable to develop at current oil prices, the option to tie in such...

Comparative-statics results for financial options are often assumed to hold for real options. But the effects of higher volatility need not be increased value and postponed investment. This depends on signs of correlations and what parameters are held constant. For real options, the...

China is appraised to have the world's largest exploitable reserves of shale gas, although several legal, regulatory, environmental and investment-related issues will likely restrain its scope. China's capacity to successfully face these hurdles and produce commercial shale gas will have a...

China is appraised to have the world's largest exploitable reserves of shale gas, although several legal, regulatory, environmental and investment-related issues will likely restrain its scope. China's capacity to successfully face these hurdles and produce commercial shale gas will have a...

The United States has long suffered from a schizophrenia about energy policy. The importance of one of the factors in energy policy, the environment, has never been formally defined. Climate change adds another distinct layer to this complexity, as neither energy policies nor environmental...

China is appraised to have the world's largest exploitable reserves of shale gas, although several legal, regulatory, environmental and investment-related issues will likely restrain its scope. China's capacity to successfully face these hurdles and produce commercial shale gas will have a...

In this paper, we study the determinants of switching from non-renewable natural resource inputs to renewable resource inputs in energy production. We assume that the stocks of both natural resources are stochastic, and that the adoption of renewable resources is costly and irreversible. Our...