Estimates of patent rents from firm market value
The value of patent rents is an important quantity for policy analysis. However, estimates in the literature based on patent renewals might be understated. Market value regressions could provide validation, but they have not had clear theoretical foundations for estimating patent rents. I develop a simple model to make upper-bound estimates of patent rents using regressions on Tobin's Q. I test this on a sample of US firms and find it robust to a variety of considerations. Estimates from market value regressions correspond well with estimates based on patentee behavior generally, but renewal estimates might be understated for pharmaceuticals.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James Bessen & Michael J. Meurer, 2008. "Introduction to Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk," Introductory Chapters, in: Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk Princeton University Press.
- Bosworth, Derek & Rogers, Mark, 2001. "Market Value, R&D and Intellectual Property: An Empirical Analysis of Large Australian Firms," The Economic Record, The Economic Society of Australia, vol. 77(239), pages 323-37, December.
- Gambardella, Alfonso & Harhoff, Dietmar & Verspagen, Bart, 2008. "The Value of European Patents," CEPR Discussion Papers 6848, C.E.P.R. Discussion Papers.
- James Bessen, 2006.
"The Value of U.S. Patents by Owner and Patent Characteristics,"
0603, Research on Innovation.
- Bessen, James, 2008. "The value of U.S. patents by owner and patent characteristics," Research Policy, Elsevier, vol. 37(5), pages 932-945, June.
- Fumio Hayashi, 1981.
"Tobin's Marginal q and Average a : A Neoclassical Interpretation,"
457, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Hayashi, Fumio, 1982. "Tobin's Marginal q and Average q: A Neoclassical Interpretation," Econometrica, Econometric Society, vol. 50(1), pages 213-24, January.
- Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 783-832.
- James Bessen & Robert M. Hunt, 2004.
"An empirical look at software patents,"
03-17, Federal Reserve Bank of Philadelphia.
- Lanjouw, Jean O & Pakes, Ariel & Putnam, Jonathan, 1998. "How to Count Patents and Value Intellectual Property: The Uses of Patent Renewal and Application Data," Journal of Industrial Economics, Wiley Blackwell, vol. 46(4), pages 405-32, December.
- Bronwyn H. Hall, 1990. "The Manufacturing Sector Master File: 1959-1987," NBER Working Papers 3366, National Bureau of Economic Research, Inc.
- Bronwyn H. Hall, 2004.
"Exploring the Patent Explosion,"
NBER Working Papers
10605, National Bureau of Economic Research, Inc.
- Bronwyn Hall, 2004. "Exploring the patent explosion," ESRC Centre for Business Research - Working Papers wp291, ESRC Centre for Business Research.
- Brainard, William C. & Shoven, John B., 1980. "The financial valuation of the return to capital," Proceedings, Federal Reserve Bank of San Francisco, issue 4, pages 43-104.
- Scherer, F. M. & Harhoff, Dietmar, 2000. "Technology policy for a world of skew-distributed outcomes," Research Policy, Elsevier, vol. 29(4-5), pages 559-566, April.
- Villalonga, Belen, 2004. "Intangible resources, Tobin's q, and sustainability of performance differences," Journal of Economic Behavior & Organization, Elsevier, vol. 54(2), pages 205-230, June.
- Zvi Griliches & Jerry A. Hausman, 1984.
"Errors in Variables in Panel Data,"
NBER Technical Working Papers
0037, National Bureau of Economic Research, Inc.
- Edwin Mansfield, 1986. "Patents and Innovation: An Empirical Study," Management Science, INFORMS, vol. 32(2), pages 173-181, February.
- Marc Baudry & Béatrice Dumont, 2006.
"Patent renewals as options : improving the mechanism for weeding out lousy patents,"
- Marc Baudry & Béatrice Dumont, 2006. "Patent Renewals as Options: Improving the Mechanism for Weeding Out Lousy Patents," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(1), pages 41-62, 02.
- Silverberg Gerald & Verspagen Bart, 2004.
"The size distribution of innovations revisited: an application of extreme value statistics to citation and value measures of patent significance,"
021, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
- Silverberg, Gerald & Verspagen, Bart, 2007. "The size distribution of innovations revisited: An application of extreme value statistics to citation and value measures of patent significance," Journal of Econometrics, Elsevier, vol. 139(2), pages 318-339, August.
- Silverberg, G. & Verspagen, B., 2004. "The size distribution of innovations revisited: an application of extreme value statistics to citation and value measures of patent significance," Working Papers 04.17, Eindhoven Center for Innovation Studies.
- Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000.
"Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not),"
NBER Working Papers
7552, National Bureau of Economic Research, Inc.
- Wesley M Cohen & Richard R Nelson & John P Walsh, 2003. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," Levine's Working Paper Archive 618897000000000624, David K. Levine.
- Griliches, Zvi, 1981.
"Market value, R&D, and patents,"
Elsevier, vol. 7(2), pages 183-187.
- James Bessen & Michael J. Meurer, 2005. "The Patent Litigation Explosion," Working Papers 0501, Research on Innovation.
- William C. Brainard & John B. Shoven & Laurence Weiss, 1980. "The Financial Valuation of the Return to Capital," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 11(2), pages 453-512.
- Megna, Pamela & Klock, Mark, 1993. "The Impact on Intangible Capital on Tobin's q in the Semiconductor Industry," American Economic Review, American Economic Association, vol. 83(2), pages 265-69, May.
- Ashish Arora & Marco Ceccagnoli & Wesley M. Cohen, 2003.
"R&D and the Patent Premium,"
NBER Working Papers
9431, National Bureau of Economic Research, Inc.
- Ariel Pakes & Mark Schankerman, 1984. "The Rate of Obsolescence of Patents, Research Gestation Lags, and the Private Rate of Return to Research Resources," NBER Chapters, in: R&D, Patents, and Productivity, pages 73-88 National Bureau of Economic Research, Inc.
- Hall, Bronwyn H. & MacGarvie, Megan, 2010.
"The private value of software patents,"
Elsevier, vol. 39(7), pages 994-1009, September.
- Hall, Bronwyn H & Jaffe, Adam B & Trajtenberg, Manuel, 2001.
"The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools,"
CEPR Discussion Papers
3094, C.E.P.R. Discussion Papers.
- Bronwyn H. Hall & Adam B. Jaffe & Manuel Trajtenberg, 2001. "The NBER Patent Citation Data File: Lessons, Insights and Methodological Tools," NBER Working Papers 8498, National Bureau of Economic Research, Inc.
- Hall, B. & Jaffe, A. & Trajtenberg, M., 2001. "The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools," Papers 2001-29, Tel Aviv.
- Scherer, F. M., 1983. "The propensity to patent," International Journal of Industrial Organization, Elsevier, vol. 1(1), pages 107-128, March.
- Harhoff, Dietmar & Scherer, Frederic M. & Vopel, Katrin, 2003. "Citations, family size, opposition and the value of patent rights," Research Policy, Elsevier, vol. 32(8), pages 1343-1363, September.
- McGahan, Anita M. & Silverman, Brian S., 2006. "Profiting from technological innovation by others: The effect of competitor patenting on firm value," Research Policy, Elsevier, vol. 35(8), pages 1222-1242, October.
- William E. Griffiths & Paul H. Jensen & Elizabeth Webster, 2005. "The Effects on Firm Profits of the Stock of Intellectual Property Rights," Melbourne Institute Working Paper Series wp2005n04, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
When requesting a correction, please mention this item's handle: RePEc:eee:respol:v:38:y:2009:i:10:p:1604-1616. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.