Working papers – 2020

A série de working papers do CICEE tem apenas o formato digital (PDF), sendo o Professor João Ribeiro o Coordenador responsável pela receção, atribuição de DOI e upload dos working papers.

A publicação de working papers da (co)autoria de investigadores convidados do CICEE, está dependente da sua prévia aceitação em conferência com aceitação com arbitragem científica.
A publicação de working papers da (co)autoria de investigadores permanentes do CICEE, é efetuada após parecer favorável conjunto do Coordenador da série de working papers e de um investigador permanente do Centro designado pela Direção do CICEE.
A publicação de working papers da autoria de investigadores externos ao CICEE está dependente da prévia realização de seminário no âmbito do ciclo de seminários de investigação do CICEE.

003 – Firm Diversification and Performance: An Empirical Examination

Jorge Humberto Mota and Mário Coutinho dos Santos

This paper examines several dimensions of the relationship between diversification and performance. Specifically, we investigate the link between related and unrelated diversification and performance. We also study the effect of the potential redeployment of ‘plastic’ assets on unrelated diversification. To investigate this, we estimated a dynamic panel on a data set of 2,396 diversified firms from the euro area, over the 2010-2017 sampling period. Empirical results indicate that an increase in the level of unrelated diversification, is significantly associated with an 0.65 percent improvement in performance, and related diversification with an 0.98 percent increase in performance. Additionally, we found that the level of unrelated diversification is positively and significantly impacted, 1.32 percent, by changes in the level of asset plasticity. Overall, our findings contribute to the corporate diversification literature by documenting that both, related and unrelated diversification, impact positively performance. Moreover, providing evidence consistent with the intuition that asset plasticity may be a positive factor for unrelated diversification strategies.

002 – Investment Timing and Social Welfare under Feed-in Tariff Contract Schemes

Luciana Barbosa, Artur Rodrigues and Alberto Sardinha

This paper presents a novel model to analyze the effects on the investment timing and social welfare of three feed-in tariffs (FIT) within an oligopolistic market structure. The FIT contracts are the fixed price, the fixed premium, and the minimum price guarantee. The model allows the identification of the optimal time to deploy a renewable energy project and the value of the tariff that maximizes the social welfare for each FIT design. These optimal tariffs generate the same investment timing and the same social welfare.

001 – Feed-in Tariff Contract Schemes and Regulatory Uncertainty

Luciana Barbosa, Cláudia Nunes, Artur Rodrigues and Alberto Cunha

This paper presents a novel analysis of two feed-in tariffs (FIT) under market and regulatory uncertainty, namely a sliding premium with cap and floor and a minimum price guarantee. Regulatory uncertainty is modeled with a Poisson process, whereby a jump event may reduce the tariff before the signature of the contract. Using a semi-analytical real options framework, we derive the project value, the optimal investment threshold, and the value of the investment opportunity for these schemes. Taking into consideration the optimal investment threshold, we also compare the two aforementioned FITs with the fixed-price FIT and the fixed-premium FIT, which are policy schemes that have been extensively studied in the literature. Our results show that increasing the likelihood of a jump event lowers the investment threshold for all the schemes; moreover, the investment threshold also decreases when the tariff reduction increases. We also compare the four schemes in terms of the corresponding optimal investment thresholds. For example, we find that the investment threshold of the sliding premium is lower than the minimum price guarantee. This result suggests that the first regime is a better policy than the latter because it accelerates the investment while avoiding excessive earnings to producers.

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