A real options analysis of coffee planting in Vietnam |
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Authors: | Quoc V Luong Loren W Tauer |
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Institution: | Department of Applied Economics and Management, Cornell University, Ithaca, New York, USA |
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Abstract: | Vietnam grew from an insignificant to the world's second largest coffee producer during the 1990s. To understand this growth, this article examines Vietnamese coffee growers' investment decisions using real options theory. The study finds that producers, with variable costs of 19 cents/lb and total cost of 29.3 cents/lb, would enter coffee production at a coffee price of 47 cents/lb and exit at a coffee price of 14 cents/lb. Most Vietnamese growers appear to be sufficiently efficient to continue producing coffee even at relatively depressed price levels. |
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Keywords: | C61 D21 G12 O13 Q12 |
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