Real R & D Options

by Paxson

• ISBN13: 9780750653329
• ISBN10: 0750653329
• Format: Hardcover
• Copyright: 2003-01-17
• Publisher: Elsevier Science

Summary

Real R&D options are among the earliest modelled real options, with now ten primary practical uses: general R&D planning, planning R&D in stages, evaluating test information, new product development timing, operations, abandonment, risk sharing, market funding, industry strategy and regulation. This book was partly motivated by requests to identify and develop real option models for R&D in telecommunications, petroleum technology and biotechnology. Nine new models cover information and implementation costs, analytical solutions for mean reverting, or fat tailed revenues, endogenous learning and exogenous and experiential shocks, American sequential options, and innovator advantages. Four new applications include forward start development options, exploration options, innovation with information costs, and innovator's real values with changing market share. R&D directors and researchers will find several uses for these models: · general R&D planning · evaluating test information · new product development timing · risk sharing · industry strategy and regulation *A practical guide to how organizations can use Real Option techniques to effectively value research and development by companies *Provides a rigorous theoretical underpinning of the use of Real Option techniques *Real Options applications are orientated around the economies of North America, Europe and Asia, for an international perspective

Table of Contents

List of contributors	vii
Introduction to real R&D options	1	(10)
Dean A. Paxson
On irreversibility, sunk costs and investment under incomplete information	11	(19)
Mondher Bellalah
Investment under economic and implementation uncertainty	30	(18)
Andrianos E. Tsekrekos
An options approach to new product development: experience from Philips Electronics	48	(19)
Onno Lint
Enrico Pennings
Analytic solutions for the value of the option to (dis)invest	67	(24)
Nicholas Biekpe
Paul Klumpes
Mark Tippett
Student's distribution and the value of real options	91	(20)
Huw Rhys
Mark Tippett
Real R&D options with endogenous and exogenous learning	111	(19)
Spiros H. Martzoukos
Approximate valuation of real R&D American sequential exchange options	130	(19)
Jongwoo Lee
Dean A. Paxson
Optimal exploration investments under price and geological--technical uncertainty: a real options model	149	(17)
Gonzalo Cortazar
Eduardo S. Schwartz
Jaime Casassus
Investments in technological innovations under incomplete information	166	(19)
Mondher Bellalah
The effect of first-mover's advantages on the strategic exercise of real options	185	(23)
Andrianos E. Tsekrekos
Leader/follower real value functions if the market share follows a birth/death process	208	(20)
Dean A. Paxson
Helena Pinto
R&D investment decision and optimal subsidy	228	(23)
Jyh-bang Jou
Tan Lee
Optimal R&D investment tax credits under mean reversion return	251	(20)
Jyh-bang Jou
Tan Lee
Genzyme Biosurgery: a virtual real R&D option case	271	(20)
Dean A. Paxson
Selective review of real R&D options literature	291	(34)
Dean A. Paxson
Index	325