Investment reluctance in supply chains: An agent-based real options approach

Alfons Balmann (), Karin Kataria and Oliver Musshoff

EconStor Open Access Articles and Book Chapters, 2013, vol. 3, issue 2A, 1-10

Abstract: This paper shows how agent-based stochastic approaches can provide a complementary and more flexible approach to study investment incentives and price dynamics in a real options framework. We particularly study the case of two-stage production chains in which one sector produces an intermediate product and the other the final product, and the intermediate product is traded on the spot market. An agent-based competitive model using a genetic algorithm allows us to explicitly model the behaviors and interactions of the firms competing in each subsector and trading the intermediate product with each other on a spot market, and optimal investment strategies can be identified.

Keywords: real options; supply chain; agent-based models; genetic algorithms (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:171341

DOI: 10.4236/jmf.2013.32A001

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