Martzoukos, Spiros H and Zacharias, Eleftherios (2008): Real Option Games with R&D and Learning Spillovers.

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Abstract
We model preinvestment R&D decisions in the presence of spillover effects in an option pricing framework with analytic tractability. Two firms face two decisions that are solved for interdependently in a twostage game. The firststage decision is: what is the optimal level of coordination (optimal policy/technology choice)? The secondstage decision is: what is the optimal effort for a given level of the spillover effects and the cost of information acquisition? The framework is extended to a twoperiod stochastic game with (pathdependency inducing) switching costs that make strategy revisions harder. Strategy shifts are easier to observe in more volatile environments.
Item Type:  MPRA Paper 

Original Title:  Real Option Games with R&D and Learning Spillovers 
Language:  English 
Keywords:  Benefit Analysis; Real Options; Coordination Games; R&D 
Subjects:  G  Financial Economics > G3  Corporate Finance and Governance > G31  Capital Budgeting ; Fixed Investment and Inventory Studies ; Capacity G  Financial Economics > G1  General Financial Markets > G13  Contingent Pricing ; Futures Pricing 
Item ID:  12686 
Depositing User:  Eleftherios /E Zacharias 
Date Deposited:  14 Jan 2009 09:11 
Last Modified:  27 Sep 2019 23:09 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/12686 