A Real Options Approach to Contractual Agreements and Value Flexibility

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Gaston Milanesi
Gaston Milanesi
σ
Fernando Tohme
Fernando Tohme
α Universidad Nacional del Sur Universidad Nacional del Sur

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A Real Options Approach to Contractual Agreements and Value Flexibility

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Abstract

Contracts are usually analyzed in the light of the reduction of transaction costs that they may ensure. But this disregards the advantages of strategic flexibility in business relations. In this paper we consider a model of provider-client relation and see how flexibility in the contract (seen as a combination of a put and a call option) ensures a higher payoff to the involved parties.

References

17 Cites in Article
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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Gaston Milanesi. 2014. \u201cA Real Options Approach to Contractual Agreements and Value Flexibility\u201d. Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 14 (GJMBR Volume 14 Issue C2): .

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Issue Cover
GJMBR Volume 14 Issue C2
Pg. 61- 66
Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Version of record

v1.2

Issue date

June 4, 2014

Language
en
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Contracts are usually analyzed in the light of the reduction of transaction costs that they may ensure. But this disregards the advantages of strategic flexibility in business relations. In this paper we consider a model of provider-client relation and see how flexibility in the contract (seen as a combination of a put and a call option) ensures a higher payoff to the involved parties.

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A Real Options Approach to Contractual Agreements and Value Flexibility

Gaston Milanesi
Gaston Milanesi Universidad Nacional del Sur
Fernando Tohme
Fernando Tohme

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