Using the Real Option Method to Value Intellectual Property

Dr. George Korenko, a partner at Edgeworth, authored the chapter “Using the Real Option Method to Value Intellectual Property” in the September 2005 publication Economic Approaches to Intellectual Property Policy, Litigation, and Management.

This chapter discusses how to use a “real options” approach to valuing multi-stage development processes. For example, using a Black-Scholes formula or decision tree approach to valuing a project can provide better insight than traditional discounted cash flow analysis into the current value and ultimate drivers of value for multi-stage projects, such as R&D.

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