Option Pricing by the Nonrenewable Resource Extracting Firm Facing Output Price Uncertainty

John Hartwick and David Yeung

Working Paper from Economics Department, Queen's University

Abstract: We establish a general preference for price uncertainty by the price taking, risk neutral, nonrenewable resource extracting firm with orthodox convex extraction costs. Option prices for delivery of a ton at a particular date in the future exceed the expected dollar return from the purchase of the option. The dependence of the option price on initial stock size takes a simple form.

Pages: 18 pages
Date: 1985
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:590

Access Statistics for this paper

More papers in Working Paper from Economics Department, Queen's University Contact information at EDIRC.
Bibliographic data for series maintained by Mark Babcock ().