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The Governance of Contracts: Empirical Evidence on Technology Licensing Agreements

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  • Eric Brousseau
  • Régis Coeurderoy
  • Camille Chaserant

Abstract

This paper provides new evidence on the contractual governance of technology licensing agreements. Using an international sample of licensing contracts, we explore how contracts are designed to deal with specific contractual risks. In particular, we comparatively assess the influences of transaction attributes, institutional frameworks, and strategic considerations on the creation of licenses. Empirical results reveal that contractual clauses for governance are crafted independently. This leads to a discussion of complementarities between contractual components, which are frequently assumed in theory. Furthermore, our results are certainly amongst the first to provide econometric evidence on the pervasive influence of private institutions on the trading of technology.

Suggested Citation

  • Eric Brousseau & Régis Coeurderoy & Camille Chaserant, 2007. "The Governance of Contracts: Empirical Evidence on Technology Licensing Agreements," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(2), pages 205-235, June.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200706)163:2_205:tgocee_2.0.tx_2-q
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    References listed on IDEAS

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    1. Brousseau,Eric & Glachant,Jean-Michel (ed.), 2002. "The Economics of Contracts," Cambridge Books, Cambridge University Press, number 9780521814904.
    2. Ashish Arora, 1995. "Licensing Tacit Knowledge: Intellectual Property Rights And The Market For Know-How," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 4(1), pages 41-60.
    3. Bessy, Christian & Brousseau, Eric, 1998. "Technology licensing contracts features and diversity1," International Review of Law and Economics, Elsevier, vol. 18(4), pages 451-489, December.
    4. Brousseau,Eric & Glachant,Jean-Michel (ed.), 2002. "The Economics of Contracts," Cambridge Books, Cambridge University Press, number 9780521893138.
    5. Athey, Susan. & Stern, Scott, 1969-, 1998. "An empirical framework for testing theories about complementarity in orgaziational design," Working papers WP 4022-98., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    6. repec:dau:papers:123456789/12331 is not listed on IDEAS
    7. Eric Brousseau & Christian Bessy, 2006. "Public and Private Institutions in the Governance of Intellectual Property Rights," Chapters, in: Birgitte Andersen (ed.), Intellectual Property Rights, chapter 8, Edward Elgar Publishing.
    8. Brickley, James A, 1999. "Incentive Conflicts and Contractual Restraints: Evidence from Franchising," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 745-774, October.
    9. Bernstein, Lisa, 1992. "Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry," The Journal of Legal Studies, University of Chicago Press, vol. 21(1), pages 115-157, January.
    10. Preet S Aulakh & S Tamer Cavusgil & M B Sarkar, 1998. "Compensation in International Licensing Agreements," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(2), pages 409-419, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Cuihong Fan & Byoung Heon Jun & Elmar G. Wolfstetter, 2018. "Optimal licensing under incomplete information: the case of the inside patent holder," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(4), pages 979-1005, December.
    2. Duplat, Valérie & Coeurderoy, Régis & Hagedoorn, John, 2018. "Contractual governance and the choice of dispute-resolution mechanisms: Evidence on technology licensing," Research Policy, Elsevier, vol. 47(6), pages 1096-1110.
    3. Jae-Seung Han & Sang-Yong Lee, 2013. "The impact of technology transfer contract on a firm’s market value in Korea," The Journal of Technology Transfer, Springer, vol. 38(5), pages 651-674, October.
    4. Giulia Trombini & Anna Comacchio, 2012. "Cooperative Markets for Ideas: When does Technology Licensing Combine with R&D Partnerships?," Working Papers 8, Department of Management, Università Ca' Foscari Venezia.
    5. Giebe, Thomas & Wolfstetter, Elmar, 2008. "License auctions with royalty contracts for (winners and) losers," Games and Economic Behavior, Elsevier, vol. 63(1), pages 91-106, May.
    6. Cuihong Fan & Byoung Heon Jun & Elmar G. Wolfstetter, 2016. "Optimal Licensing of Non-Drastic and (Super-)Drastic Innovations: The Case of the Inside Patent Holder," Discussion Paper Series 1610, Institute of Economic Research, Korea University.
    7. Gordanier, John & Miao, Chun-Hui, 2011. "On the duration of technology licensing," International Journal of Industrial Organization, Elsevier, vol. 29(6), pages 755-765.
    8. Fan, Cuihong & Jun, Byoung Heon & Wolfstetter, Elmar G., 2018. "Per unit vs. ad valorem royalty licensing," Economics Letters, Elsevier, vol. 170(C), pages 71-75.
    9. Marco Furlotti, 2007. "There is more to contracts than incompleteness: a review and assessment of empirical research on inter-firm contract design," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 11(1), pages 61-99, March.
    10. Arora, Ashish & Gambardella, Alfonso, 2010. "The Market for Technology," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 641-678, Elsevier.

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    More about this item

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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