@article{Seo:20229,
      recid = {20229},
      author = {Seo, Sangtaek and Salin, Victoria and Mitchell, Paul D.  and Leatham, David J.},
      title = {EFFECT OF REVENUE INSURANCE ON ENTRY AND EXIT DECISIONS IN  TABLE GRAPE PRODUCTION: A REAL OPTION APPROACH},
      address = {2004},
      number = {377-2016-21084},
      series = {Selected Paper},
      pages = {25},
      year = {2004},
      abstract = {This study determines the entry and exit thresholds of  table grape farming with irreversible investment under  uncertainty.  Real option approach is adopted to consider  the investment and management flexibility.  Also revenue  insurance is introduced to consider the effect of the risk  management programs on the entry and exit thresholds.   Results show that revenue insurance increases the entry and  exit thresholds by 1% and 4%, respectively, thus  discouraging new investment and current farming, as long as  the revenue guarantee is less than the exit threshold.   Revenue insurance increases the entry threshold by 3% and  decreases the exit threshold by 13% as long as the revenue  guarantee is greater than the exit threshold.  In this  case, revenue insurance discourages the investment and  encourages the current farmer to stay in farming, further.   However, the decrease in the subsidy rate results in the  increase in both entry and exit thresholds.  Thus, the  premium subsidy levels should be carefully considered if  the policy objective is to encourage growers to shift to  higher-value crops.},
      url = {http://ageconsearch.umn.edu/record/20229},
      doi = {https://doi.org/10.22004/ag.econ.20229},
}