In addition to the binomial option pricing, this paper focuses on the competitiveness of R&D projects. Then project timing strategies of duopoly are discussed with a perfect information dynamic game. This game has taken into account the uncertainty of market demand, the exclusiveness of real options, and the flexibility to defer investment decision. The outcomes indicate that, the incentives to develop a new product have the positive relation with market volatility. If firms change their strategies when market demand varies, deferment is better than immediate investment. But deferment also has disadvantage. It misses the cash inflow during the deferment period. If the loss during the deferment period is obviously important because of the threat of the competitor to shorten the profitable period, the firm winning patent should develop a new product earlier.