search query: @freeterm Abatement capital / total: 1
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| Author: | Lundgren, T. |
| Title: | A real options approach to abatement investments and green goodwill |
| Journal: | Environmental and Resource Economics
2003 : MAY, VOL. 25:1, p. 17-31 |
| Index terms: | Environmental policy Uncertainty Cost benefit analysis |
| Freeterms: | Abatement capital Irreversibility |
| Language: | eng |
| Abstract: | The authors investigate the effects on the abatement investment decision of changes in uncertainty about future green goodwill, competitor abatement investment, regulations, etc., using a real options framework. The results indicate that increased uncertainty about consumers' willingness to pay for "green" products in the future discourage voluntary abatement investments. The model also suggests that voluntary abatement investments are promoted by an increased threat of regulation and competitor abatement investments. Furthermore, the benefit-cost ratio of the abatement investment project, at the point where it is optimal to invest, is independent of what regulatory regime the firm operates in. |
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