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Licensing Tacit Knowledge: Intellectual Property Rights And The Market For Know-How

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  • Ashish Arora

Abstract

Technology transfer involves more than just the permission to use knowledge covered by patents; the transfer of know-how is critical to the successful utilization of the transferred technology. However, know-how is typically difficult to codify, costly to transfer, and hence, difficult to contract upon. Using a principal-agent model I show that simple arms length contracts can accomplish the transfer know-how. The key to the success of arms length contracts is the complementarity between know-how and patents. The model explains why patents and know-how are bundled together in licensing contracts. It shows why licensing has limitations as a strategy for appropriating rents from innovation. The paper points to the key role that patent scope plays in determining the efficiency of know-how transfer and shows that broader patents can improve the efficiency of technology transfer, even when important components of the technology (know-how) are not protected by patents.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 4 (1995)
Issue (Month): 1 ()
Pages: 41-60

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Handle: RePEc:taf:ecinnt:v:4:y:1995:i:1:p:41-60

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Related research

Keywords: Know-how; licensing; patents J.E.L. classification: 034; L14;

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