Early Abandonment of a Motorway Concession Contract. Value of the Abandonment Option and Probability of Abandonment under the Real Options Framework
This article uses a real options framework to determine value of the abandonment option and the probability of abandonment of transportation-related infrastructure projects. The authors note that investments in transport infrastructure projects, and specifically in toll motorway concessions, are associated with a high degree of uncertainty and require a large amount of resources. The authors apply the options theory to the specific case of the abandonment option in a toll motorway concession project. For this purpose, the traffic of the motorway has been considered as the underlying asset to carry out a valuation based on the analogy with the financial options. This methodology is then applied to a case study of a real concession in Madrid, Spain. The authors conclude that their results show a significant value of the abandonment option that represents an implicit and unintended aid from the Public Administration to the project.
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Availability:
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Authors:
- Galera, Antonio L Lara
- Soliño, Antonio Sánchez
- Aires, Rubén A Galindo
- Publication Date: 2016-11
Language
- English
Media Info
- Media Type: Print
- Features: Figures; References; Tables;
- Pagination: pp 475-492
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Serial:
- International Journal of Transport Economics
- Volume: 43
- Issue Number: 4
- ISSN: 0391-8440
- Serial URL: http://www.libraweb.net/riviste.php?chiave=67
Subject/Index Terms
- TRT Terms: Abandonment; Benefit cost analysis; Capital expenditures; Concessions; Costs; Infrastructure; Public administration; Road construction; Toll roads
- Geographic Terms: Madrid (Spain)
- Subject Areas: Administration and Management; Economics; Highways;
Filing Info
- Accession Number: 01623727
- Record Type: Publication
- Files: TRIS
- Created Date: Jan 25 2017 3:08PM