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Complementarities and spill-overs in mergers: an empirical investigation using patent data

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  • Marco, Alan C.
  • Rausser, Gordon C.

Abstract

Many recent empirical studies have examined the effect of the patent system on R&D, innovation and patenting behavior. However, few micro-level empirical papers have addressed the impact of the patent system on industry structure. In this paper we build on our previous work to investigate merger activity of firms in light of their patent holdings. We use agricultural biotechnology as an example. Three innovations are introduced: firm-level patent data is investigated as a predictor of merger activity; second, we develop a measure of patent enforceability based on patent litigation data; third, we combine both duration models and logic models in order to investigate both the timing of mergers and the matching of merger partners. The empirical results demonstrate that patent statistics are a useful predictor of merger activity; mergers in agricultural biotechnology appear to be partially motivated by difficulties in enforcing patent rights when firms have overlapping technologies; and some of the merger activity may be explained by attempts to reduce spillovers.

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Bibliographic Info

Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt93s769k8.

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Date of creation: 12 Jun 2002
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Handle: RePEc:cdl:agrebk:qt93s769k8

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Keywords: agriculture; biotechnology; mergers; methodology; patents; Social and Behavioral Sciences;

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References

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  1. Samuel Kortum & Josh Lerner, 1997. "Stronger Protection or Technological Revolution: What is Behind the Recent Surge in Patenting?," NBER Working Papers 6204, National Bureau of Economic Research, Inc.
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Cited by:
  1. Ornaghi, Carmine, 2009. "Mergers and innovation in big pharma," International Journal of Industrial Organization, Elsevier, vol. 27(1), pages 70-79, January.
  2. Emmanuel Duguet & Megan MacGarvie, 2005. "How well do patent citations measure flows of technology? Evidence from French innovation surveys," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(5), pages 375-393.
  3. Ornaghi, Carmine, 2006. "Mergers and innovation: the case of the pharmaceutical industry," Discussion Paper Series In Economics And Econometrics 0605, Economics Division, School of Social Sciences, University of Southampton.

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