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Competitive StrategyOptions and Games$
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Competitive Strategy: Options and Games

Benoît Chevalier-Roignant and Lenos Trigeorgis

Print publication date: 2011

Print ISBN-13: 9780262015998

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262015998.001.0001

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Uncertainty, Flexibility, and Real Options

Uncertainty, Flexibility, and Real Options

Chapter:
(p.153) 5 Uncertainty, Flexibility, and Real Options
Source:
Competitive Strategy
Author(s):

Benoît Chevalier-Roignant

Lenos Trigeorgis

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262015998.003.0005

This chapter discusses the strategy formulation challenges encountered by firms when the underlying market is uncertain. Motivated by the uncertainty faced by European electric utilities, it discusses how real options analysis can be used to analyze such situations, value strategic options, and optimally chose among them. It also considers discrete-time and continuous-time tools for the pricing of embedded real options.

Keywords:   strategic investment, uncertain market, electric utilities, options analysis

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