From Green Whiskers

Real options and economic depreciation

Posted in: All sector Reports / Papers

By Henry Ergas and John Small
March 13, 2000

The paper describes a duality between the value of the real option to delay investment by one period and the expected economic depreciation over that period. One implication is that existing real options models, which treat depreciation as exogenous, are mis-specified.. more. (pdf, size 21kb)