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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/30548
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| Title: | | Investing in biogas: timing, technological choice and the value of flexibility from inputs mix  |
| Authors: | | Corato, Luca Di Moretto, Michele |
| Issue Date: | | 2009 |
| Series/Report no.: | | CESifo working paper 2729 |
| Abstract: | | In a continuous-time framework we study the technology and investment choice problem of a continuous co-digestion biogas plant dealing with randomly fluctuating relative convenience of input factor costs. Input factors enter into the productive process together mixed according to a given initial rule. Being inputs relative convenience stochastically evolving, a successive revision of the initial rule may be desirable. Hence, when the venture starts the manager may or may not install a flexible technology allowing for such option. Investment is irreversible and flexibility is costly. The problem is solved determining in the light of future prospects the optimal revision and then playing backward fixing the investment timing rule. |
| Subjects: | | factor proportions technological choice flexibility real options alternative energy source |
| JEL: | | C61 D24 Q42 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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