Located along shorelines, seaports are highly vulnerable to coastal and marine natural disasters largely due to climate change. Damage caused by disasters can be prevented or alleviated if sufficient investments are made in a timely manner. However, despite a wide range of investment options and well-developed engineering expertise, port investment on disaster prevention remains a challenging t…
This study models airport capacity choice when a real option for expansion can be pur- chased. Facing demand uncertainty, an airport first determines the capacity for immediate investment (the prior capacity) and the size of the land or other resources to be reserved for possible future expansion (the reserve). Once demand is observed, the airport can use a portion of the reserve to build extra…