Investment Reluctance in Supply Chains: An Agent-Based Real Options Approach

DOI: 10.4236/jmf.2013.32A001   PDF   HTML   XML   4,364 Downloads   7,627 Views   Citations

Abstract

This paper shows how agent-based stochastic approaches can provide a complementary and more flexible approach to study investment incentives and price dynamics in a real options framework. We particularly study the case of two-stage production chains in which one sector produces an intermediate product and the other the final product, and the intermediate product is traded on the spot market. An agent-based competitive model using a genetic algorithm allows us to explicitly model the behaviors and interactions of the firms competing in each subsector and trading the intermediate product with each other on a spot market, and optimal investment strategies can be identified.

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A. Balmann, K. Kataria and O. Musshoff, "Investment Reluctance in Supply Chains: An Agent-Based Real Options Approach," Journal of Mathematical Finance, Vol. 3 No. 2A, 2013, pp. 1-10. doi: 10.4236/jmf.2013.32A001.

Conflicts of Interest

The authors declare no conflicts of interest.

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