Chapter2007

An Examination of Options Embedded in a Firm's Patents: The Value of Dispersion in Citations

14 citations0/0 files storedEmerald Group Publishing Limited eBooks

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Intellectual Property and Patents Capital Investment and Risk Analysis Firm Innovation and Growth

Abstract

This paper applies and empirically tests a real options approach to conceptualizing the value of patents. Based on a theorem derived by Merton (1973), we propose that greater dispersion in the citations of a firm's patents represents greater flexibility for the firm to exercise the option rights embedded in the patents and thus enhances the option value of the patents. A test of this proposition using a sample of 128 US-based biotechnology firms found corroborative results.

Citations in this library

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References

1991Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations 1977Determinants of corporate borrowing 1994Investment Under Uncertainty.1973Theory of Rational Option Pricing 1986Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy 1993Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy 2005Theory of rational option pricing 2004A finite sample correction for the variance of linear efficient two-step GMM estimators

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