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Flexible Use of Diesel or Biodiesel: An Approach Via Real Options

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Abstract

Our main goal is to study the development of biodiesel as a renewable energy source in Brazilian reality. Specifically, we shall discuss the flexibility between traditional diesel and biodiesel. It will be evaluated the option pricing of a diesel-run device where it is possible to use diesel or biodiesel. The evaluation will be done by means of a Real Options Approach, where the choice is modeled on a European options sequence. We also comment on the added gains for a country like Brazil.

Keyword : investment under uncertainty, real options, flexibility, renewable energy sources Investimento sob Incerteza, Opções Reais, Flexibilidade, Fontes Renováveis de Energia

How to Cite
Gonçalves, E. D. L., & Ferreira, L. L. (2008). Flexible Use of Diesel or Biodiesel: An Approach Via Real Options. Brazilian Business Review, 5(3), 218-232. https://doi.org/10.15728/bbr.2008.5.3.4

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