Patent Valuation and Real Options

Deger Alper
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Deger Alper: Uludag University, Faculty of Economics and Administrative Sciences, Department of Business Administration, Bursa, Turkey, Postal: Uludag University, Faculty of Economics and Administrative Sciences, Department of Business Administration, Bursa, Turkey

Business and Economics Research Journal, 2011, vol. 2, issue 1, 153

Abstract: As the knowledge economics grows rapidly, businesses increasingly invest intellectual property and the value of intellectual property; patent, trademark, copyright etc., more emphasized in business nowadays. Thus, the valuation of intellectual property, specifically patents, has been one of the most difficult investment problems both for practitioners and academics. Traditional valuation methods fail to account for the unique characteristics of patents; uncertainty and management flexibility. Patents are option-like assets that give the owner a bundle of options; to commercialize the products, to file foreign application, to license the innovation etc. Real options represent the application of options methodology to strategic business decisions, and real option method provides a richer framework to analyse the issues that confront the valuation of patent. This paper uses real option model as a framework to correctly evaluate patent and contains real option model application to patent valuation

Keywords: Patent valuation; Intellectual property; Real options (search for similar items in EconPapers)
JEL-codes: G13 O34 (search for similar items in EconPapers)
Date: 2011
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