Optimal investment timing in the dry bulk shipping sector

Christiana C. Gkochari

Transportation Research Part E: Logistics and Transportation Review, 2015, vol. 79, issue C, 102-109

Abstract: The aim of this paper is to illustrate, for the first time, the performance of optimal perfectly competitive investment strategies based on option games in dry bulk shipping. Using a dataset of the Capesize market development over the period January 2000–May 2013 the author derives the stochastic dynamic equilibrium in that market. Moreover, the author examines the effect of newbuildings completion delays and finds that moving from completion delays to no time-to-build reduces the trigger value. The current analysis brings about additional insights and helps explain the existence of boom-and-bust cycles in shipping.

Keywords: Investment strategy; Dry bulk shipping; Option games; Perfect competition; Time to build; Boom-and-bust cycles (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (11)

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DOI: 10.1016/j.tre.2015.02.018

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