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Complementarities and spill-overs in mergers: an empirical investigation using patent data

  • Marco, Alan C.
  • Rausser, Gordon C

    ()

    (University of California, Berkeley. Dept of agricultural and resource economics and policy)

Many recent empirical studies have examined the effect of the patent system on R&D, innovation and patenting behavior. However, few micro-level empirical papers have addressed the impact of the patent system on industry structure. In this paper we build on our previous work to investigate merger activity of firms in light of their patent holdings. We use agricultural biotechnology as an example. Three innovations are introduced: firm-level patent data is investigated as a predictor of merger activity; second, we develop a measure of patent enforceability based on patent litigation data; third, we combine both duration models and logic models in order to investigate both the timing of mergers and the matching of merger partners. The empirical results demonstrate that patent statistics are a useful predictor of merger activity; mergers in agricultural biotechnology appear to be partially motivated by difficulties in enforcing patent rights when firms have overlapping technologies; and some of the merger activity may be explained by attempts to reduce spillovers.

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Paper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 930R.

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Length: 42 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:are:cudare:930r
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  10. Joel Waldfogel, 1993. "The Selection Hypothesis and the Relationship between Trial and Plaintiff Victory," NBER Working Papers 4508, National Bureau of Economic Research, Inc.
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  15. Kortum, Samuel & Lerner, Josh, 1998. "Stronger protection or technological revolution: what is behind the recent surge in patenting?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 48(1), pages 247-304, June.
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  18. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
  19. Merges, Robert P. & Nelson, Richard R., 1994. "On limiting or encouraging rivalry in technical progress: The effect of patent scope decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 25(1), pages 1-24, September.
  20. Urs Schweizer, 1989. "Litigation and Settlement under Two-Sided Incomplete Information," Review of Economic Studies, Oxford University Press, vol. 56(2), pages 163-177.
  21. Dickerson, Andrew P & Gibson, Heather D & Tsakalotos, Euclid, 1998. "Takeover Risk and Dividend Strategy: A Study of UK Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 46(3), pages 281-300, September.
  22. Mark Schankerman, 1998. "How Valuable is Patent Protection? Estimates by Technology Field," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 77-107, Spring.
  23. Werden, G.J. & Froeb, L.M. & Tardiff, T.J., 1994. "The Use of the Logit Model in Applied Industrial Organization," Papers 94-1, U.S. Department of Justice - Antitrust Division.
  24. Joshua Lerner, 1994. "The Importance of Patent Scope: An Empirical Analysis," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 319-333, Summer.
  25. Paul Geroski & Steve Machin & John Van Reenen, 1993. "The Profitability of Innovating Firms," RAND Journal of Economics, The RAND Corporation, vol. 24(2), pages 198-211, Summer.
  26. Tremblay, Victor J & Tremblay, Carol Horton, 1988. "The Determinants of Horizontal Acquisitions: Evidence from the U.S. Brewing Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 37(1), pages 21-45, September.
  27. George L. Priest & Benjamin Klein, 1984. "The Selection of Disputes for Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 13(1), pages 1-56, January.
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