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Are there option values for transport services? A few studies have tried to answer this question through various stated preference methods, but we do not know much about its magnitude in different contexts. In this paper, we summarize the theory on option value, present previous empirical work concerning transport, and discuss its links to accessibility. Accessibility can be seen as the end product of the transport system, and the argument we pursue is that option value is a component of accessibility. Therefore, estimations of the option value ought to be connected to the marginal accessibility change of an optional transport mode. The concept of substitutability has the potential to meet this criterion. It is the degree to which an alternative trip can replace an initially preferred trip, or, put differently, how accessibility at a location is composed. We conduct an empirical application to test whether the variation in housing transaction prices is associated with substitutability. We find that housing prices are higher where the accessibility is built up by several transport modes, given any level of total accessibility. We interpret this as households, on average, are willing to pay a risk premium to keep optional transport modes available.

ABSTRACT Nongovernmental organizations frequently receive donations of land that have unknown characteristics. This paper presents an analytical model of the option to preserve such land. The nongovernmental organizations' option value arises from the option to preserve or sell the land to generate funds for other preservation projects. We show that die preservation option is equivalent to an option that allows the nongovernmental organization to choose between he maximum of the market value of the land and the preservation value of the land. From the resulting closed from solution of the option to preserve, we perform comparative statics showing how the relevant factors (preservation value of the land, the development value of the land, the length of the that the option is available, and the uncertainty surrounding the relative values of preservation and development) influence the value of the preservation option. In addition, to the basic model, we present three model modifications. The first examines the effects of costly preservation and costly nonpreservation. In the second extension, we examine the effects of freeriding modeled by a continuous variable. In the final modification, we relax the assumption of the fixed survey period and show the optimal development date.

AbstractIn this paper, I use a real options approach to investigate patent litigation when enforcement is costly, winning is uncertain, and beliefs about validity are stochastic. I consider both finite horizon and infinite horizon models. The theoretical results demonstrate that patent value depends not only upon the underlying technology but also upon the degree of uncertainty over the property right. Additionally, imperfect enforceability creates an effective patent term that is less than the statutory term. Using simulation methods and patent data, I estimate the hazard rate of patent litigation. Contrary to previous studies, I find that the rate of forward citations is negatively associated with the litigation rate. The difference arises because (1) I use a dynamic model that exploits the information contained in the timing of litigation and citations, and (2) I control for truncation using a duration model. Using random effects models, I find that heterogeneity in patent litigation is embedded primarily in the heterogeneity in receiving patent citations. Because of this, the patent litigation decision can be modeled as a unilateral decision.