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On Supply Side Option Value

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  • Graham-Tomasi, Theodore
  • Myers, Robert J.

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.

Suggested Citation

  • Graham-Tomasi, Theodore & Myers, Robert J., 1989. "On Supply Side Option Value," Staff Papers 13341, University of Minnesota, Department of Applied Economics.
    • Handle: RePEc:ags:umaesp:13341
    DOI: 10.22004/ag.econ.13341
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    References listed on IDEAS

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    1. Mark L. Plummer, 1986. "Supply Uncertainty, Option Price, and Option Value: An Extension," Land Economics, University of Wisconsin Press, vol. 62(3), pages 313-318.
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