IDEAS home Printed from https://ideas.repec.org/a/taf/uteexx/v69y2024i4p241-254.html
   My bibliography  Save this article

The impact of tracking costs on real options

Author

Listed:
  • Óscar Gutiérrez

Abstract

This article presents a real options model that explicitly takes into account the tracking costs required to follow the evolution of an investment opportunity. We find the impacts of tracking costs on investment timing are far from negligible. For typical parameter configurations, tracking costs lead to consequential corrections to the standard solution. In addition, the option to discard the investment opportunity becomes relevant. The impact of tracking costs on investments is more evident for low levels of volatility. In some cases, the optimal policy is similar to the Net Present Value rule.

Suggested Citation

  • Óscar Gutiérrez, 2024. "The impact of tracking costs on real options," The Engineering Economist, Taylor & Francis Journals, vol. 69(4), pages 241-254, October.
    • Handle: RePEc:taf:uteexx:v:69:y:2024:i:4:p:241-254
    DOI: 10.1080/0013791X.2024.2438145
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/0013791X.2024.2438145
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/0013791X.2024.2438145?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    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:taf:uteexx:v:69:y:2024:i:4:p:241-254. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/UTEE20 .

    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.