IDEAS home Printed from https://ideas.repec.org/a/agr/journl/v11(528)(supplement)y2008i11(528)(supplement)p341-348.html
   My bibliography  Save this article

Entry And Exit Decisions Under Uncertainty: A Real Option Approach

Author

Listed:
  • Nicoleta Vintila

    (Academy of Economic Studies, Bucharest)

Abstract

This paper focuses on models proposed in financial literature for establishing optimum time for entry and exit as strategic decisions for a firm, decisions that can be modeled through real options. Uncertainty refers to price for the product obtained from operating the project, and equally the investment cost. Using as an example a project analyzed by a company from furniture industry, we demonstrate that, under uncertainty, entry in the market takes place at a price level that is much higher than total cost, while decision to exit from the market is adopted when price level is much lower than the variable cost. We also analyze effects of this phenomenon, named hysteresis, when model parameters change.

Suggested Citation

  • Nicoleta Vintila, 2008. "Entry And Exit Decisions Under Uncertainty: A Real Option Approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 11(11(528)(s), pages 341-348, November.
    • Handle: RePEc:agr:journl:v:11(528)(supplement):y:2008:i:11(528)(supplement):p:341-348
    as

    Download full text from publisher

    File URL: http://www.asociatiaeconomistilor.ro/documente/Conferinta_FABBV_engleza.pdf
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:agr:journl:v:11(528)(supplement):y:2008:i:11(528)(supplement):p:341-348. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mircea Dinu (email available below). General contact details of provider: https://edirc.repec.org/data/agerrea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.