An option pricing approach to investment in innovations in a competitive environment

Ariane Reiß

No 116, Tübinger Diskussionsbeiträge from University of Tübingen, School of Business and Economics

Abstract: In this paper it is illustrated how option-based valuation can be used to determine whether and when a firm should patent and adopt an Innovation if the arrival time of competitors is stochastic. Four distinct strategies are derived: Apply for a patent without introducing the new technology right away, patent the Innovation and invest immediately, initiate the new project without patent protection, or defer the decision. It is shown how competition and the level of patent fee determines the strategy to be pursued and the maximum amount of R&D expenditures.

Date: 1997
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/104835/1/tdb116.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuedps:116

Access Statistics for this paper

More papers in Tübinger Diskussionsbeiträge from University of Tübingen, School of Business and Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().