Abstract
Flexibility, uncertainty, and irreversibility provide gains from waiting. These gains have been elaborated in the context of finance (financial option), investment (real option), and environmental policy (quasi option). While the financial and real option values are closely linked as the real option value theory has been developed from the financial option value theory the quasi option value originated from environmental economics and the link with financial and real option value theory is less obvious. A comparison between the three option theories shows similarities as well as differences. Knowing in particular the cause of differences will be important for understanding why either of the approach may yield a different result, for the interpretation of the results, and for the choice of approach.
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