The purpose of this paper is to construct the option pricing model of land- use right based on the real option theory. Method of real option model was employed. The results indicate that the land- use right is interpreted as an American call option, the underlying asset is regarded as housing price, the price of land-use right includes two parts, the discounted value of land development income and development of premium (real option value). It is concluded that the land development decision-making faces growing uncertainties, which makes the di...
