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Hybrid or Electric Vehicles? A Real Options Perspective

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Author Info
Michi NISHIHARA () (Graduate School of Economics, Osaka University)
Abstract

This paper investigates the decision of an automaker concerning the alternative promotion of a hybrid vehicle (HV) and a full electric vehicle (EV). We evaluate the HV project by considering the option to change promotion from the HV to the EV in the future. The results not only extend previous findings concerning American options on multiple assets, but also include several new implications. One notable observation is that the increased market demand for EVs can accelerate the promotion of the HV because of the embedded option.

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File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0931.pdf
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Publisher Info
Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 09-31.

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Length: 16 pages
Date of creation: Sep 2009
Date of revision:
Handle: RePEc:osk:wpaper:0931

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Web page: http://www.econ.osaka-u.ac.jp/
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Related research
Keywords: real options; American options on multiple assets; exercise region; alternative projects; hybrid and electric vehicles.;

Find related papers by JEL classification:
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Investment Policy
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D

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This page was last updated on 2009-11-26.

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