ON SUPPLY SIDE OPTION VALUE

Theodore Graham-Tomasi and Robert Myers ()

No 13341, Staff Papers from University of Minnesota, Department of Applied Economics

Abstract: In this paper the ability to sign supply-side option value is studied. The compensating and equivalent option prices are defined, and it is argued that equivalent option price is the preferred welfare measure. In the absence of income risk, if the probability distribution of supply is degenerate either with or without the project, one-way test of project acceptance can be established.

Keywords: Research; Methods/; Statistical; Methods (search for similar items in EconPapers)
Pages: 20
Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:ags:umaesp:13341

DOI: 10.22004/ag.econ.13341

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