To understand the recent trend toward privatization of infrastructure assets (e.g., airports), this article proposes a valuation methodology based on real options and game theory analysis that enables assessing when investors might overpay for infrastructure assets over standard discounted cash flow methods and when a premium is justified for their operating flexibility or strategic growth option value. While some infrastructure asset acquisitions may involve financial transactions whose value derives primarily from their expected cash flows, many of these infrastructure investments provide a platform and create the strategic context within which the firm can grow.

, , , , , ,
ERIM Top-Core Articles
California Management Review
Erasmus Research Institute of Management

Smit, H., & Trigeorgis, L. (2009). Valuing infrastructure investment: An option games approach. California Management Review, 51(2), 82–104. Retrieved from