Arbeitspapier
An option approach to water delegation
The problem that we address in this paper stems from the trend to delegation in the water management field. The problem that we address refers to the municipality's negotiating disadvantage in the face of some cartelized water management. We discuss the specific characteristics of the delegation auction that render it useless as a tool for collective welfare maximisation. We show that the remaining tool for achieving collective welfare maximisation, i.e. the municipality's right to revoke delegation and return to direct management, is also ineffective due to a lack of credibility that is essentially financial in nature. Thus, if the credibility of revocation could be restored, the municipality's bargaining power could also be restored. Using standard methods of stochastic calculus, we model the municipality's right of revocation as a call option held by the municipality. We show that the value of this option depends to a large extent on the exercise price, which is partly determined by objective economic criteria and partly by legal and institutional conventions. Based on this we suggest that credibility could be restored by the constitution of a fund at least as large as the effective exercise price.
- Sprache
-
Englisch
- Erschienen in
-
Series: Nota di Lavoro ; No. 85.1997
- Klassifikation
-
Wirtschaft
Renewable Resources and Conservation: Water
Technological Change: Choices and Consequences; Diffusion Processes
Contingent Pricing; Futures Pricing; option pricing
- Thema
-
Delegation
Water management
Auctions and bids
Wasserversorgung
Auktionstheorie
Theorie
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Clark, Ephraim A.
Mondello, Gérard
- Ereignis
-
Veröffentlichung
- (wer)
-
Fondazione Eni Enrico Mattei (FEEM)
- (wo)
-
Milano
- (wann)
-
1997
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Clark, Ephraim A.
- Mondello, Gérard
- Fondazione Eni Enrico Mattei (FEEM)
Entstanden
- 1997
Ähnliche Objekte (12)
A Simple Approach to CAPM and Option Pricing
Barrier option hedging under constraints: a viscosity approach
Firm Regulation and Profit-Sharing: A Real Option Approach
Exchange rate volatility and international trade: The option approach
Public capital and private investment, a real option approach
A Simple Approach to CAPM, Option Pricing and Asset Valuation
Solar Grid Parity Dynamics in Italy: A Real Option Approach
Land-use change and solar energy production: A real option approach
The economic valuation of variance forecasts: An artificial option market approach
An option pricing approach to investment in innovations in a competitive environment
Firm-level heterogeneity and the decision to export: A real option approach
Foreign direct investment in transition economies: An option approach to sovereign risk
A Simple Approach to CAPM and Option Pricing
Barrier option hedging under constraints: a viscosity approach
Firm Regulation and Profit-Sharing: A Real Option Approach
Exchange rate volatility and international trade: The option approach
Public capital and private investment, a real option approach
A Simple Approach to CAPM, Option Pricing and Asset Valuation
Solar Grid Parity Dynamics in Italy: A Real Option Approach
Land-use change and solar energy production: A real option approach
The economic valuation of variance forecasts: An artificial option market approach
An option pricing approach to investment in innovations in a competitive environment
Firm-level heterogeneity and the decision to export: A real option approach
Foreign direct investment in transition economies: An option approach to sovereign risk
A Simple Approach to CAPM and Option Pricing
Barrier option hedging under constraints: a viscosity approach
Firm Regulation and Profit-Sharing: A Real Option Approach
Exchange rate volatility and international trade: The option approach
Public capital and private investment, a real option approach
A Simple Approach to CAPM, Option Pricing and Asset Valuation
Solar Grid Parity Dynamics in Italy: A Real Option Approach
Land-use change and solar energy production: A real option approach
The economic valuation of variance forecasts: An artificial option market approach
An option pricing approach to investment in innovations in a competitive environment
Firm-level heterogeneity and the decision to export: A real option approach