Asset Sale and Scrapping: An Option Pricing Approach
Greek Economic Review, Vol. 20, No. 1, Spring 2000
Posted: 19 Apr 2001
Abstract
This paper presents a real options framework to study asset sale and scrapping under uncertainty. We derive an optimal scrapping rule that depends only on observable or estimateable parameters. An econometric framework is specified and applications to other issues such as voluntary liquidation, take over premiums are indicated.
Keywords: Asset sale; Scrapping; Real options; American Put option
JEL Classification: G31, G33
Suggested Citation: Suggested Citation
Song, Jihe and Gao, Shumei, Asset Sale and Scrapping: An Option Pricing Approach. Greek Economic Review, Vol. 20, No. 1, Spring 2000, Available at SSRN: https://ssrn.com/abstract=261050
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