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Visibility of Technology and Cumulative Innovation: Evidence from Trade Secrets Laws

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  • Bernhard Ganglmair

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  • Imke Reimers

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Abstract

We use exogenous variation in the strength of trade secrets protection to show that a relative weakening of patents (compared to trade secrets) has a disproportionately negative effect on the disclosure of processes - inventions that are not otherwise visible to society. We develop a structural model of initial and follow-on innovation to determine the effects of such a shift in disclosure on overall welfare in industries characterized by cumulative innovation. We find that while stronger trade secrets encourage investment in R&D, they may have negative effects on overall welfare - the result of a significant decline in follow-on innovation.

Suggested Citation

  • Bernhard Ganglmair & Imke Reimers, 2019. "Visibility of Technology and Cumulative Innovation: Evidence from Trade Secrets Laws," CRC TR 224 Discussion Paper Series crctr224_2019_119, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2019_119
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    File URL: https://www.crctr224.de/en/research-output/discussion-papers/discussion-papers#DP119
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    References listed on IDEAS

    as
    1. Crass, Dirk & Valero, Francisco Garcia & Pitton, Francesco & Rammer, Christian, 2019. "Protecting Innovation Through Patents and Trade Secrets: Evidence for Firms with a Single Innovation," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 117-156.
    2. Daniel P. Gross, 2019. "The Consequences of Invention Secrecy: Evidence from the USPTO Patent Secrecy Program in World War II," NBER Working Papers 25545, National Bureau of Economic Research, Inc.
    3. Watzinger, Martin & Fackler, Thomas A. & Nagler, Markus, 2017. "How Antitrust Enforcement Can Spur Innovation," Rationality and Competition Discussion Paper Series 4, CRC TRR 190 Rationality and Competition.
    4. Jeffrey L. Furman & Markus Nagler & Martin Watzinger, 2018. "Disclosure and Subsequent Innovation: Evidence from the Patent Depository Library Program," NBER Working Papers 24660, National Bureau of Economic Research, Inc.
    5. James J. Anton & Dennis A. Yao, 2004. "Little Patents and Big Secrets: Managing Intellectual Property," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 1-22, Spring.
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    Cited by:

    1. Gaetan de Rassenfosse & Gabriele Pellegrino & Emilio Raiteri, 2020. "Do Patents Enable Disclosure? Evidence from the Invention Secrecy Act," Working Papers 9, Chair of Innovation and IP Policy.
    2. Daniel P. Gross, 2019. "The Consequences of Invention Secrecy: Evidence from the USPTO Patent Secrecy Program in World War II," NBER Working Papers 25545, National Bureau of Economic Research, Inc.
    3. Alexander M. Danzer & Carsten Feuerbaum & Fabian Gaessler, 2020. "Labor Supply and Automation Innovation," CReAM Discussion Paper Series 2014, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.

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    More about this item

    Keywords

    cumulative innovation; disclosure; self-disclosing inventions; Uniform Trade Secrets Act;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • 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

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