IDEAS home Printed from
   My bibliography  Save this paper

Acquisitions and use of patents: A theory and new evidence from the Japanese firm level data


  • Nagaoka, Sadao
  • Nishimura, Yoichiro


A significant part of the patents held by a firm are not used. We show that, given the uncertainty of invention quality at the patent application stage and the sunk cost incurred for obtaining and developing a patent, the patent (internal) utilization rate declines with the (anticipated) size of complementary assets, licensing opportunity, and invention quality uncertainty while it increases with the average quality of an invention. We find empirical evidence supportive of these theoretical predictions. Moreover, a firm with larger price cost margin does not have a lower rate of patent utilization, which does not support the view of preemptive R&D and patenting as a primary explanation of unused patents. Finally, a firm with more diversified patent portfolio tends to have more patents but its utilization rate tends to be lower, suggesting that such diversification facilitates appropriation.

Suggested Citation

  • Nagaoka, Sadao & Nishimura, Yoichiro, 2005. "Acquisitions and use of patents: A theory and new evidence from the Japanese firm level data," IIR Working Paper 05-14, Institute of Innovation Research, Hitotsubashi University.
  • Handle: RePEc:hit:iirwps:05-14

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    patent; unused patents; uncertainty; complementary assets;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General


    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:hit:iirwps:05-14. 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: (Digital Resources Section, Hitotsubashi University Library). 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.