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Uncertainty and the market for patents

  • Troy, Irene
  • Werle, Raymund
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    Modern societies regard knowledge as a production factor in its own right. The market is the prevailing governance mode of their economies, and it is supposed to be the most appropriate mode of trading and allocating knowledge assets, too. But socio-economic research has revealed that knowledge markets are far from functioning smoothly. Building on ongoing qualitative research into patent trading we suggest that the emergence of a well-functioning market for patented new technological knowledge is confronted with several obstacles, which can be characterized as different facets of uncertainty. They are included in the process of creation of innovative knowledge, in its transformation into a fictitious knowledge commodity (patent), in its uniqueness, in the strategy of transaction partners, in the estimation of the future market potential of final products (based on the patent), and generally in the problem of incomplete and asymmetric information. Also a commonly accepted method of determining a patent's value is missing. We analyze structural and organizational responses to the problem of uncertainty. Potential traders often rely on contractual options, especially licensing agreements, and complementary procedural principles facilitating the trade of patents.

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    File URL: http://econstor.eu/bitstream/10419/41680/1/574282009.pdf
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    Paper provided by Max Planck Institute for the Study of Societies in its series MPIfG Working Paper with number 08/2.

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    Date of creation: 2008
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    Handle: RePEc:zbw:mpifgw:082
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    1. Alfonso Gambardella & Paola Giuri & Alessandra Luzzi, 2006. "The Market for Patents in Europe," LEM Papers Series 2006/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    3. Daniel Beunza & David Stark, 2004. "Tools of the trade: the socio-technology of arbitrage in a Wall Street trading room," Industrial and Corporate Change, Oxford University Press, vol. 13(2), pages 369-400, April.
    4. Shigeki Kamiyama & Jerry Sheehan & Catalina Martinez, 2006. "Valuation and Exploitation of Intellectual Property," OECD Science, Technology and Industry Working Papers 2006/5, OECD Publishing.
    5. Harhoff, Dietmar & Scherer, Frederic M. & Vopel, Katrin, 2003. "Citations, family size, opposition and the value of patent rights," Research Policy, Elsevier, vol. 32(8), pages 1343-1363, September.
    6. Dosi, G & Egidi, M, 1991. "Substantive and Procedural Uncertainty: An Exploration of Economic Behaviours in Changing Environments," Journal of Evolutionary Economics, Springer, vol. 1(2), pages 145-68, April.
    7. Hoppe, Heidrun C. & Ozdenoren, Emre, 2005. "Intermediation in Innovation," CEPR Discussion Papers 4891, C.E.P.R. Discussion Papers.
    8. Ashish Arora & Andrea Fosfuri & Alfonso Gambardella, 2004. "Markets for Technology: The Economics of Innovation and Corporate Strategy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511819, June.
    9. Anand, Bharat N & Khanna, Tarun, 2000. "The Structure of Licensing Contracts," Journal of Industrial Economics, Wiley Blackwell, vol. 48(1), pages 103-35, March.
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