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Do Patents Shield Disclosure or Assure Exclusivity When Transacting Technology?

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Author Info

  • Gaétan de Rassenfosse

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; Intellectual Property Research Institute of Australia, The University of Melbourne)

  • Alfons Palangkaraya

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; Intellectual Property Research Institute of Australia, The University of Melbourne)

  • Elizabeth Webster

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; Intellectual Property Research Institute of Australia, The University of Melbourne)

Abstract

Patents may assist trade in technology either by protecting buyers against the expropriation of the idea by third parties (the appropriation effect) or by enabling sellers to more frankly disclose the idea during the negotiation phase (the disclosure effect). We test for the presence of both these effects using quasi-experimental matching analysis on a novel dataset of 860 technology transaction negotiations. We identify the appropriation effect by comparing the probability of successful negotiations involving a granted patent with those involving a pending patent. Similarly, we identify the disclosure effect by comparing the probability of successful negotiations involving a pending patent with those involving no patent. We find evidence for the appropriation but not the disclosure effect: technology transaction negotiations involving a granted patent instead of a pending patent are 10 per cent more likely to be successfully completed (compared with an average completion rate of approximately 80 per cent).

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Bibliographic Info

Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2013n05.

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Length: 19 pages
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:iae:iaewps:wp2013n05

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Keywords: Markets for technology; R&D; invention; patent; intellectual property; appropriability;

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  1. Teece, David J., 1986. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," Research Policy, Elsevier, vol. 15(6), pages 285-305, December.
  2. Joshua S. Gans & David H. Hsu & Scott Stern, 2008. "The Impact of Uncertain Intellectual Property Rights on the Market for Ideas: Evidence from Patent Grant Delays," Management Science, INFORMS, vol. 54(5), pages 982-997, May.
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  8. Stefano Iacus & Gary King & Giuseppe Porro, 2009. "Multivariate Matching Methods That are Monotonic Imbalance Bounding," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1089, Universitá degli Studi di Milano.
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  13. James J. Anton & Dennis A. Yao, 2003. "Patents, Invalidity, and the Strategic Transmission of Enabling Information," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(2), pages 151-178, 06.
  14. Jeremy R. Groves & William H. Rogers, 2011. "Effectiveness of RCA Institutions to Limit Local Externalities: Using Foreclosure Data to Test Covenant Effectiveness," Land Economics, University of Wisconsin Press, vol. 87(4), pages 559-581.
  15. Gans, Joshua S. & Stern, Scott, 2003. "The product market and the market for "ideas": commercialization strategies for technology entrepreneurs," Research Policy, Elsevier, vol. 32(2), pages 333-350, February.
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