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Patent Value and Citations: Creative Destruction or Strategic Disruption?

  • David S. Abrams

    ()

    (Penn Law School & Wharton Business Economics & Public Policy Department, University of Pennsylvania,)

  • Ufuk Akcigit

    ()

    (Department of Economics, University of Pennsylvania & NBER)

  • Jillian Popadak

    ()

    (Wharton Business Economics & Public Policy Department, University of Pennsylvania)

Prior work suggests that more valuable patents are cited more and this view has become standard in the empirical innovation literature. Using an NPE-derived dataset with patent-specific revenues we find that the relationship of citations to value in fact forms an inverted-U, with fewer citations at the high end of value than in the middle. Since the value of patents is concentrated in those at the high end, this is a challenge to both the empirical literature and the intuition behind it. We attempt to explain this relationship with a simple model of innovation, allowing for both productive and strategic patents. We find evidence of greater use of strategic patents where it would be most expected: among corporations, in fields of rapid development, in more recent patents and where divisional and continuation applications are employed. These findings have important implications for our basic understanding of growth, innovation, and intellectual property policy.

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File URL: http://economics.sas.upenn.edu/system/files/13-065.pdf
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Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 13-065.

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Length: 41 pages
Date of creation: 05 Nov 2013
Date of revision:
Handle: RePEc:pen:papers:13-065
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  1. Rosemarie Ham Ziedonis, 2004. "Don't Fence Me In: Fragmented Markets for Technology and the Patent Acquisition Strategies of Firms," Management Science, INFORMS, vol. 50(6), pages 804-820, June.
  2. Deepak Hegde & David C. Mowery & Stuart J. H. Graham, 2009. "Pioneering Inventors or Thicket Builders: Which U.S. Firms Use Continuations in Patenting?," Management Science, INFORMS, vol. 55(7), pages 1214-1226, July.
  3. Bronwyn H. Hall & Dietmar Harhoff, 2012. "Recent Research on the Economics of Patents," NBER Working Papers 17773, National Bureau of Economic Research, Inc.
  4. Alberto Galasso & Mark Schankerman, 2010. "Patent thickets, courts, and the market for innovation," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 472-503.
  5. Michele Boldrin & David K Levine, 2012. "The Case Against Patents," Levine's Working Paper Archive 786969000000000465, David K. Levine.
  6. Georg Graevenitz & Stefan Wagner & Dietmar Harhoff, 2013. "Incidence and Growth of Patent Thickets: The Impact of Technological Opportunities and Complexity," Journal of Industrial Economics, Wiley Blackwell, vol. 61(3), pages 521-563, 09.
  7. Lerner, Josh & Tirole, Jean, 2002. "Some Simple Economics of Open," Journal of Industrial Economics, Wiley Blackwell, vol. 50(2), pages 197-234, June.
  8. Griliches, Zvi, 1981. "Market value, R&D, and patents," Economics Letters, Elsevier, vol. 7(2), pages 183-187.
  9. Carlos J. Serrano, 2008. "The Dynamics of the Transfer and Renewal of Patents," NBER Working Papers 13938, National Bureau of Economic Research, Inc.
  10. Iain M. Cockburn & Megan J. MacGarvie, 2006. "Entry and Patenting in the Software Industry," NBER Working Papers 12563, National Bureau of Economic Research, Inc.
  11. Leonid Kogan & Dimitris Papanikolaou & Amit Seru & Noah Stoffman, 2012. "Technological Innovation, Resource Allocation, and Growth," NBER Working Papers 17769, National Bureau of Economic Research, Inc.
  12. Ariel Pakes, 1984. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," NBER Working Papers 1340, National Bureau of Economic Research, Inc.
  13. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
  14. Manuel Trajtenberg, 1990. "A Penny for Your Quotes: Patent Citations and the Value of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 172-187, Spring.
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