The Research Of Patent Valuation Based On Real Option Theory

With the improvement of science and technology in our country, patent is playing a moreand more important role in the construction of the national economy. Although enterprises canresearch and develop technology independently, it has increasingly become difficult to meet theneed of enterprise development in technology if only rely on their own internal technologyresearch.The transaction of patent arises at the historic moment. The areas and scale areexpanding rapidly.The evaluation of patent is the core problem in the process of patenttransaction. Reasonable assessment of patent can promote the patent deals to go smoothly andmake it fully participate in economic life.Firstly,this paper introduces three traditional methods of patent evaluation, then it analyzesand compares their advantages and disadvantages. Secondly, it introduces the real option theoryand real option pricing models, and discusses the applicability and advantages of the real optionmethod in patent evaluation. The paper argues that the Black-Scholes model is more suitable forpatent evaluation, compared with the binomial pricing model. Again, it discusses the applicationof the Black-Scholes model in patent evaluation, especially focusing on the analysis of variousparameters in the model. Finally, in the case study, this article uses the traditional incomeapproach and the Black-Scholes model to evaluate the patent of X company respectively. Resultsshow that the net present value of the latter is greater than the former, which is because the realoption method considers the flexibility of patent investment. The paper argues that the traditionalincome approach underestimates the value of patent. We can determine the best price of patenttransaction by using the real option method. At the same time, the thinking mode of real optionshould be applied to the investment and production decisions of patent products.