A Real Options Analysis of Coffee Planting in Vietnam

Quoc Luong and Loren W. Tauer

No 127152, Working Papers from Cornell University, Department of Applied Economics and Management

Abstract: Vietnam grew from an insignificant to the world’s second largest coffee producer during the 1990s. To understand this growth, this paper examines Vietnamese coffee growers’ investment decisions using real options theory. The study finds that producers, with variable costs of 19 cents/lb and total cost of 29.3 cents/lb, would enter coffee production at a coffee price of 47 cents/lb and exit at a coffee price of 14 cents/lb. Most Vietnamese growers appear to be sufficiently efficient to continue producing coffee even at relatively depressed price levels.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Pages: 25
Date: 2004-10
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Citations: View citations in EconPapers (1)

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Journal Article: A real options analysis of coffee planting in Vietnam (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cudawp:127152

DOI: 10.22004/ag.econ.127152

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