A Comment on “The effectiveness of carbon pricing: The role of diversification in a firm’s investment decision”

Fredrik Armerin

Energy Economics, 2024, vol. 132, issue C

Abstract: We show that the set of parameter values satisfying the constraints, needed in order to make the stopping rule used in the extended model in Compernolle et al. (2022) an optimal one, is empty. Using the stopping rule in their paper will result in a strictly smaller stopping time than the optimal stopping time. It follows that the stopping rule used in Compernolle et al. (2022) will result in a lower bound of the expected time until an investment is done.

Keywords: Optimal investment timing; Real options; Irreversible investments (search for similar items in EconPapers)
JEL-codes: C61 G11 L10 Q41 Q48 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:132:y:2024:i:c:s0140988324001956

DOI: 10.1016/j.eneco.2024.107487

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