This paper examines dynamic R&D investment policies and the valuation of R&D programs in a contingent claims framework. We incorporate the following characteristics of R&D programs into our model: learning-by-doing, collateral learning between different projects in the program, interaction...

We provide a general valuation approach for capital budgeting decisions involving the modularization in the design of a system. Within the framework developed by Baldwin and Clark (Baldwin, C. Y., K. B. Clark. 2000. Design Rules: The Power of Modularity. MIT Press, Cambridge, MA), we implement a...