Jovanovic, Boyan - Society for Economic Dynamics - SED - 2006
A firm has investment options that it may use up immediately, or store for future use. A patent, e.g., is an option to … implement an idea via a product or process innovation. Other investment options are protected by secrecy. An investment option … is a profit opportunity that requires an investment to implement. Because investment options are scarce, Tobin’s q is …