Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/24705
Authors: 
Toole, Andrew A.
Czarnitzki, Dirk
Year of Publication: 
2008
Series/Report no.: 
ZEW Discussion Papers 06-056 [rev.]
Abstract: 
Real options investment theory predicts current investment falls as uncertainty about market returns increases. In the case of R&D investment, which is usually considered an irreversible form of investment, this effect should be quite pronounced. This paper tests the real options prediction about the R&D investment-uncertainty relationship and further considers how patent protection influences this relationship. Patent protection, by limiting the threat of market rivalry, should mitigate firm-specific uncertainty and stimulate current R&D investment. Our empirical results support both the prediction of real options theory and the mitigating effect of patent protection.
Subjects: 
Real Options Theory
Uncertainty
R&D
Intellectual Property Protection
Censored Regression
JEL: 
O31
O33
C25
Document Type: 
Working Paper

Files in This Item:
File
Size
275.76 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.