A Patent Value Model And It's Numerical Simulation

With the development of knowledge economy, patents as an important intangible asset has attracted more and more attention. However, the valuation of patent and it's numerical realization is still a hot issue in both academic and business circles. As the previous valuation methods have limitations. They are either simplistic by making unrealistic assumption or too complex to be applied in reality, which make them can not properly reflect the real value of the patent. Also, the emphasis of intangible assets in the new company law makes eager needs of the patent valuation. So, the study of patent valuation and it's numerical realization has important theoretical and empirical meaning. This thesis develops a theoretical model of patent value and make a numerical simulation, then discuss the determinants of patent value. Our discussion bases on a real options approach and try to develop a theoretical patent value method which considers the uncertainty about future value. In this model, the uncertainty is reflect by modeling all of the variable as stochastic process .This thesis takes the viewpoint that the patent value is not equal to the value of the patent-protected project, it suppose to be the difference of a project value with patent and a project value without protection. On this basis, the Monte Carlo simulation is used to estimate an R&D project value ant the same project value without patent protection. The margin of the two values is the value of the patent. After estimating the value of a patent, a detailed sensitivity analyses compare the determinants of patent value. The results show that the total costs of completion of R&D project, the periodical net cash flows, the variance and the discount rate seems to be important determinants of patent value. By contrast, the drift, the annual probability of failure and the sales multiple do not have a major influence on patent value.