R & D Competition In The Real Options Evaluation Model

This paper considers the appraisal model of R&D competition under real options approach. The author expects the appraisal of the R&D project to be more scientific and accurate, and expects the research of this text can play a certain reference positive role to the management and decision of the R&D investment.First, it looks back the basic theory of R&D and real options and analysis system. Second, it analyzes the market structure and the model of R&D competition, and concludes that the analysis of R&D competition model can be based on the optimal investment rule for a single firm. Third, it studies optimal investment timing of R&D project with uncertain return. Fourth, it analyzes the model of R&D competition, including cooperative benchmark and non-cooperative equilibrium. R&D cooperation includes two investment patterns: sequential investment pattern and simultaneous investment pattern. Depending on parameter values, R&D non-cooperation has two type of equilibrium: leader-follower equilibrium and joint-investment equilibrium. By comparing the cooperative and non-cooperation solution the inefficiency of non-cooperation behavior can ready be seen. At last, it is the part of conclusion and prospect of this paper.