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Why do patents facilitate trade in technology? Testing the disclosure and appropriation effects

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  • Gaetan de Rassenfosse

    () (Ecole polytechnique federale de Lausanne)

  • Alfons Palangkaraya

    () (Swinburne University of Technology)

  • Elizabeth Webster

    () (Swinburne University of Technology)

Abstract

Evidence suggests that patents facilitate technology transactions but the reasons for the effect are unclear. Patents may assist trade in technology by either: (i) protecting buyers against the expropriation of the idea (the 'appropriation effect'); or (ii) increasing information sharing during the negotiation phase through publication of technical details contained in the patent document (the 'disclosure effect'). We estimate the strength of both effects using exact matching analysis on a novel dataset of 860 technology transaction negotiations. We find evidence for the appropriation but not the disclosure effect. Technology transaction negotiations involving a granted patent instead of a pending patent (our test for the appropriation effect) are significantly more likely to be successfully completed. The appropriation effect is stronger in technology fields where patent protection is known to be more effective such as biotech, chemicals, drugs and medical.

Suggested Citation

  • Gaetan de Rassenfosse & Alfons Palangkaraya & Elizabeth Webster, 2016. "Why do patents facilitate trade in technology? Testing the disclosure and appropriation effects," Working Papers 2, Chair of Innovation and IP Policy.
  • Handle: RePEc:iip:wpaper:2
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    References listed on IDEAS

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    3. Morricone, Serena & Munari, Federico & Oriani, Raffaele & de Rassenfosse, Gaetan, 2017. "Commercialization Strategy and IPO Underpricing," Research Policy, Elsevier, vol. 46(6), pages 1133-1141.
    4. Gaétan de Rassenfosse & Martin Kracker & Gianluca Tarasconi, 2017. "Getting Started with PATSTAT Register," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 50(1), pages 110-120, March.
    5. Laurie Ciaramella & Catalina Martínez & Yann Ménière, 2017. "Tracking patent transfers in different European countries: methods and a first application to medical technologies," Scientometrics, Springer;Akadémiai Kiadó, vol. 112(2), pages 817-850, August.
    6. Zaby, Alexandra Karin & de Rassenfosse, Gaétan, 2016. "The Economics of Patent Backlog," Annual Conference 2016 (Augsburg): Demographic Change 145673, Verein für Socialpolitik / German Economic Association.
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    11. Catalina Martinez & Pluvia Zuniga, 2017. "Contracting for technology transfer: patent licensing and know-how in Brazil," Industry and Innovation, Taylor & Francis Journals, vol. 24(6), pages 659-689, August.
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    More about this item

    Keywords

    appropriability; disclosure; licensing; market for technology; patent;

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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