| The traditional project investment evaluating methods, which are represented by Net Present Value method, are through comparing the present values of expected income and cost stream to evaluate. Although they consider the reward of time and risk, they ignore the strategic value of creating following growth opportunities and the flexibility to adjust according to the market changes. Real Options Theory regards all kinds of investment opportunities and management flexibility as option and provides a practical qualitative tool. It is a great progress of investment decision theories. Options and Games Theory is the latest development, which combines option pricing theory and game theory to invest scientifically.Firstly, the paper is starting under the condition that the traditional evaluation method can not deal with irreversible character, uncertainty, flexibility and competitive strategy in investment. The options and games method is a good way to evaluate them. Secondly, the origin of the value of the options and games is analyzed. Then it is discussed that the theory of options and games regulate the traditional evaluation method, get the regulation of options and games appraisal and analyzes the steps of options and games method in valuating the project investment. Thirdly this paper presents a monopoly strategic investment model under three different industrial competitive structures. Then the value components are analyzed. Finally, an improved quantity competition model is quoted to analyze the sensitivity of project value to the market demand and firm strategy. |
