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Patents As Negotiating Assets: Patenting Versus Secrecy For Startups

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  • Andreas Panagopoulos
  • In‐Uck Park

Abstract

We analyse a sequential innovation model and show that relatively narrow patent rights can facilitate a market in which startups’ patents are traded as negotiating assets. In this market, the trade of patents, on top of monopoly profits, conveys an extra surplus from the patents’ capacity to affect future tech‐transfer negotiations. This surplus, which stems from a patent's potential ability to exclude infringers and the corresponding enforcement spillovers that patents confer, may incentivise innovations that would not have been possible under trade secrecy, improving social welfare.

Suggested Citation

  • Andreas Panagopoulos & In‐Uck Park, 2018. "Patents As Negotiating Assets: Patenting Versus Secrecy For Startups," Economic Journal, Royal Economic Society, vol. 128(615), pages 2876-2894, November.
    • Handle: RePEc:wly:econjl:v:128:y:2018:i:615:p:2876-2894
    DOI: 10.1111/ecoj.12540
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    Cited by:

    1. Adriana Breccia, 2019. "R&D appropriability and market structure in a preemption model," Birkbeck Working Papers in Economics and Finance 1902, Birkbeck, Department of Economics, Mathematics & Statistics.
    2. Cédric Gossart & Altay Özaygen & Müge Özman, 2020. "Are Litigated Patents More Valuable? The Case of LEDs," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(3), pages 825-844, September.
    3. Di Fan & Long Zhao, 2022. "Old Wine in New Bottles: Patenting Propensity," Journal of Industry, Competition and Trade, Springer, vol. 22(2), pages 207-224, June.

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