Container Ship Investment Based on Real Option
Siqin Yu, Bin Ji, Jinhai Chen
Available Online April 2013.
- https://doi.org/10.2991/icsem.2013.54How to use a DOI?
- Real option, Container ship investment, Oligopoly
- This study investigates liner companies' timing of investment and sealing up container ships based on real option theory. The Dixit model is adopted to find out a pair of trigger prices for entry and exit with the assumption freight rate obey Geometric Brownian Motion. More new ship-building orders and entrants lead to lower future freight rate in the oligopoly liner shipping market. This model is tested empirically basic on the data of a 9000 TEU container ship on Far East- Europe route and the result is positive comparing to the number of ship orders. Liner companies' should make decision base on the freight of the ship in operation. Therefore, ship investment should be made at the new ship order trough and freight trough.
- Open Access
- This is an open access article distributed under the CC BY-NC license.
Cite this article
TY - CONF AU - Siqin Yu AU - Bin Ji AU - Jinhai Chen PY - 2013/04 DA - 2013/04 TI - Container Ship Investment Based on Real Option BT - 2nd International Conference On Systems Engineering and Modeling (ICSEM-13) PB - Atlantis Press SP - 281 EP - 285 SN - 1951-6851 UR - https://doi.org/10.2991/icsem.2013.54 DO - https://doi.org/10.2991/icsem.2013.54 ID - Yu2013/04 ER -