Symmetric equilibrium strategies in game theoretic real option models with incomplete information

Delaney, Laura

doi:10.1016/j.econlet.2018.10.020

Cited by 1 publication

(1 citation statement)

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“…Its model considers investment timing and opportunity costs which are not included in traditional methods, such as discounted cash flow model and net present value model [ 47 ]. Many researchers have used it under uncertain conditions to analyse the equilibrium strategies of stakeholders [ 48 , 49 ], compare the implementation effects of different policies [ 50 , 51 ] and optimize the decision-making of the investors [ 52 , 53 ]. In the context of uncertain actual demand, our study also employed the real options theory to explore the difference between construction subsidy and operating subsidy of the ECSPs in achieving the policy goals, and then provided practical implications for the government’s policy choices.…”

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confidence: 99%

Subsidy policy selection of elderly care service projects under uncertain actual demand: a real options analysis based on China’s experience

Song

Sun

2022

BMC Geriatr

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Background Elderly care service projects (ECSPs) aim to provide care services with the help of market forces on the supply side to satisfy the huge demand of the elderly. Subsidies play an important role in motivating the investors to invest in the ECSPs immediately. The optimal subsidy scheme should balance the policy costs and the investors’ interests. Methods Based on the policy background of China, this study applied the real options theory to compare the effects of construction subsidy and operating subsidy on achieving policy goals from the perspective of uncertain actual demand. It introduced numerical examples to identify the optimal subsidy scheme and embedded the data from the Chinese Longitudinal Healthy Longevity Survey (CLHLS) to verify the uncertainty of actual demand. Results The results showed that in the context of uncertain actual demand, operating subsidy has greater advantages in reducing investment thresholds, saving subsidy costs and increasing spillover values. Moreover, a sound quality supervision system, a differentiated operating subsidy scheme and a sustainable growth market demand environment are conducive to increasing the long-term interests of the government and the investors. Conclusions The study emphasized the importance of subsidy selection in the context of uncertain actual demand, and provided a practical reference for policy designers in China and other developing countries to choose the optimal subsidy scheme for the ECSPs.

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