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Structural Change in Agriculture/Strukturwandel im Agrarsektor (SiAg) Working Papers >
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http://purl.umn.edu/59521
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| Title: | Does vertical integration reduce investment reluctance in production chains? An agent-based real options approach |
| Other Titles: | Kann vertikale Integration die Investitionszurückhaltung in Wertschöpfungsketten reduzieren? Ein agentenbasierter Realoptionsansatz |
| Authors: | Balmann, Alfons
Musshoff, Oliver
Larsen, Karin |
| Authors (Email): | Balmann, Alfons (balmann@iamo.de)
Musshoff, Oliver (oliver.musshoff@agr.uni-goettingen.de)
Larsen, Karin (larsen@iamo.de) |
| Keywords: | real options
supply chain
agent-based models
genetic algorithms |
| Issue Date: | 2009-09 |
| Series/Report no.: | SiAg-Working Paper
05 |
| Abstract: | This paper uses an agent-based real options approach to analyze whether stronger vertical
integration reduces investment reluctance in pork production. A competitive model in which
firms identify optimal investment strategies by using genetic algorithms is developed. Two
production systems are compared: a perfectly integrated system and a system in which firms
produce either the intermediate product (piglets) or the final product (pork). Simulations show that the spot market solution and the perfectly integrated system lead to a very similar production dynamics even with limited information on production capacities. The results suggest that, from a pure real options perspective, spot markets are not significantly inferior to perfectly integrated supply chains. |
| URI: | http://purl.umn.edu/59521 |
| Institution/Association: | Humboldt University Berlin>Institute for Agricultural Economics and Social Sciences>Structural Change in Agriculture/Strukturwandel im Agrarsektor (SiAg) Working Papers |
| Total Pages: | 33 |
| Collections: | Structural Change in Agriculture/Strukturwandel im Agrarsektor (SiAg) Working Papers
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