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Valuation of patent - a real options perspective


  • Ming-Cheng Wu
  • Chun-Yao Tseng


Both the theoretical model and the empirical analysis methods are examined for valuing patents from the real options perspective. This study not only sets up a real options approach for evaluating patent to conform to the main sensitivity analysis of patent activities, but also establishes an empirical method about valuing patents by a panel data. Cross-sectional and time-series data from 101 Taiwanese electronic firms between 1993 and 2002 are employed for the fixed effects analysis in the panel data model. This study concludes the consist results from the theoretical model and empirical analysis. That is, the patent value increases with increasing the underlying asset, time to maturity and risk-free rate.

Suggested Citation

  • Ming-Cheng Wu & Chun-Yao Tseng, 2006. "Valuation of patent - a real options perspective," Applied Economics Letters, Taylor & Francis Journals, vol. 13(5), pages 313-318.
  • Handle: RePEc:taf:apeclt:v:13:y:2006:i:5:p:313-318 DOI: 10.1080/13504850500393477

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    References listed on IDEAS

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    Cited by:

    1. Wu, Ming-Cheng, 2011. "Antecedents of patent value using exchange option models: Evidence from a panel data analysis," Journal of Business Research, Elsevier, vol. 64(1), pages 81-86, January.
    2. Roy Cerqueti & Marco Ventura, 2009. "A Discrete Model for Patent Valuation," ISAE Working Papers 120, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    3. Arasteh, Abdollah, 2017. "Considering the investment decisions with real options games approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 1282-1294.
    4. Lee, Shun-Chung, 2011. "Using real option analysis for highly uncertain technology investments: The case of wind energy technology," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4443-4450.

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