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Option Value

Author

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  • Olsen, Graeme

Abstract

The option value of a good is the amount which potential consumers of the good are prepared to pay now, to ensure that the good remains available for future purchase. Option values should be considered when making resource allocation decisions, so that efficient decisions are made. The theoretical basis of option value is described and the problems involved in the recognition, use and measurement of option value are discussed.

Suggested Citation

  • Olsen, Graeme, 1975. "Option Value," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 19(3), pages 1-13, December.
    • Handle: RePEc:ags:ajaeau:22339
    DOI: 10.22004/ag.econ.22339
    as

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    File URL: https://ageconsearch.umn.edu/record/22339/files/19030197.pdf
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    References listed on IDEAS

    as
    1. Millard F. Long, 1967. "Collective-Consumption Services of Individual-Consumption Goods: Comment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 81(2), pages 351-352.
    2. Schmalensee, Richard, 1972. "Option Demand and Consumer's Surplus: Valuing Price Changes under Uncertainty," American Economic Review, American Economic Association, vol. 62(5), pages 813-824, December.
    3. Zeckhauser, Richard J, 1969. "Resource Allocation with Probabilistic Individual Preferences," American Economic Review, American Economic Association, vol. 59(2), pages 546-552, May.
    4. Cotton M. Lindsay, 1969. "Option Demand and Consumer's Surplus," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 83(2), pages 344-346.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Kingwell, Ross, 2002. "Issues for Farm Management in the 21st Century: A view from the West," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 10, pages 1-28, September.
    2. Kingwell, Ross S., 2002. "Issues for Farm Management in the 21st Century: A view from the West," 2002 Conference (46th), February 13-15, 2002, Canberra, Australia 173982, Australian Agricultural and Resource Economics Society.
    3. Chin-Huang Huang & Chiung-Hsia Wang, 2015. "Estimating the Total Economic Value of Cultivated Flower Land in Taiwan," Sustainability, MDPI, vol. 7(4), pages 1-19, April.
    4. Sinden, Jack A., 1978. "Estimation Of Consumer'S Surplus Values For Land Policies," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 22(2-3), pages 1-19, August.

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    Keywords

    Demand and Price Analysis;

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