IDEAS home Printed from
   My bibliography  Save this article

Information Asymmetry on the Technology Markets: the Role of Patents


  • Miglena Molhova

    () (University of National and World Economy, Sofia, Bulgaria)


This paper aims at investigating what happens on technology-driven markets when it is critically necessary to assess and evaluate information about the technology solutions prior to purchase. One of the major difficulties transaction participants face is that they are assessing not just technical properties but also intangible issues regarding the difference between technologies, the future performance of the technology, of the vendor, its behaviour, and other factors. Another major difficulty in the transactions on technology markets is managing the information flow. Here we can find a number of problems: how information about technical solutions is formed, gathered, processed, exchanged and understood from both parties in the transaction. This is where the theory of information asymmetry comes in place. Information asymmetry is the problem preventing communication processes to be effective. A possible mechanism to address the problems information asymmetry created on the technology markets is the intellectual property system in general and patent rights in particular. In this paper we will analyse the hypothesis of using a well developed, well organized in terms of institutions classical market-regulating mechanism such as the patent system. We propose a model for understanding and addressing information asymmetry on the technology markets, using one already existing legislative mechanism, namely patent rights. Our analyses are conducted using the technology markets in general and the software market in particular. These analyses are examined using theories of communication processes and theories of development of the patent system and its functions. The study resulted in the identification of information exchange pattern on the technology market and of the model of information asymmetry on that market. The paper ends by challenging the efficiency of patent rights, which though having the potential to address and solve the problem of information asymmetry on the technology markets, remains problematic and difficult to achieve.

Suggested Citation

  • Miglena Molhova, 2014. "Information Asymmetry on the Technology Markets: the Role of Patents," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 103-116, October.
  • Handle: RePEc:nwe:eajour:y:2014:i:3:p:103-116

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    information asymmetry; technology markets; intellectual property rights; patents; software market;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nwe:eajour:y:2014:i:3:p:103-116. 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: (Vanya Lazarova). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.