The paper offers a new theoretical framework to examine the role of intermediaries between creators and users of new inventions. We find that uncertainty about the profitability of investing in new inventions generates a basis for intermediation. An intermediary may provide an opportunity to economize on a critical component of efficient investment decisions - the expertise to sort `profitable' from `unprofitable' inventions. Our findings may help explain the surge in university patenting and licensing since the Bayh-Dole Act of 1980. The study also identifies several limitations to the potential efficiency of intermediation in innovation.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
4891.
Heidrun C. Hoppe & Emre Ozdenoren, 2002.
"Intermediation in Innovation,"
CIG Working Papers
FS IV 02-11, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
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Find related papers by JEL classification: D40 - Microeconomics - - Market Structure and Pricing - - - General D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D
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