Hybrid or Electric Vehicles? A Real Options Perspective

Michi Nishihara (nishihara@econ.osaka-u.ac.jp)
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Michi Nishihara: Graduate School of Economics, Osaka University

No 09-31, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This paper investigates the decision of an automaker concerning the alternative promotion of a hybrid vehicle (HV) and a full electric vehicle (EV). We evaluate the HV project by considering the option to change promotion from the HV to the EV in the future. The results not only extend previous findings concerning American options on multiple assets, but also include several new implications. One notable observation is that the increased market demand for EVs can accelerate the promotion of the HV because of the embedded option.

Keywords: real options; American options on multiple assets; exercise region; alternative projects; hybrid and electric vehicles. (search for similar items in EconPapers)
JEL-codes: C61 G13 G31 O32 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2009-09
New Economics Papers: this item is included in nep-cfn, nep-ene and nep-ppm
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:0931

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