The Market Value of Patents and R&D

Chapter 1 starts with the traditional approaches relying on the quantification of costs, revenues, or market value of the patent assets. Particular attention is devoted to the market value model relying on the Tobin's q equation and its applications in the literature are discussed. In addition, the chapter explains the patent real option approach that assesses the additional value spurring from the flexibility in time when the decision maker can delay the complementary investment required for the successful exploitation of a patent. This latter approach can be reconciled with the Tobin's q model which is not affected by problems of timing of costs and revenues, and several econometric evidences are presented in support of this view