ABSTRACT
This chapter discusses the causes of brand value volatility, and improves existing financial valuation models: financial options models and intertwined asset models. It explains the causes of brand value volatility, namely the little information existing about brands, the absence of conflict in the use of brands, and the network effects to which brands are subject. Brands are not the only assets with volatile values. Financial options in particular have a number of similar characteristics. Brands are particularly volatile economic assets. Brand value is affected by network effects, also referred to as "positive demand externalities" in economics. Brand value volatility can be understood with the help of option valuation theory. Brands are unique not only because they are not financial assets but also because they combine many specificities which introduce a high level of uncertainty into their valuation. The financial valuation techniques used are admittedly able to deal with these difficulties.
