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

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  • Bernhard Ganglmair
  • Imke Reimers

Abstract

Innovation depends on the incentives to create new ideas as well as access to existing ones. Access, in turn, depends on an initial invention's inherent visibility as well as the inventor's decision to disclose it, for example through patenting. Compared to product innovations, process innovations tend to be less visible, making secrecy as an intellectual property strategy relatively more attractive; and stronger trade secrets protection laws could hamper their disclosure even further. Using exogenous variation in the level of trade secrets protection from the Uniform Trade Secrets Act, we show that stronger protection has a disproportionately negative effect on patenting of processes. We show in simulations that these changes in disclosure can have large implications for follow-on innovation and welfare.

Suggested Citation

  • Bernhard Ganglmair & Imke Reimers, 2021. "Visibility of Technology and Cumulative Innovation: Evidence From Trade Secrets Laws," CRC TR 224 Discussion Paper Series crctr224_2021_119v3, University of Bonn and University of Mannheim, Germany, revised Sep 2024.
    • Handle: RePEc:bon:boncrc:crctr224_2021_119v3
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    Cited by:

    1. Rammer, Christian, 2022. "Measuring process innovation output: Results from firm-level panel data," ZEW Discussion Papers 22-002, ZEW - Leibniz Centre for European Economic Research.
    2. Alexander M. Danzer & Carsten Feuerbaum & Fabian Gaessler, 2020. "Labor Supply and Automation Innovation," CESifo Working Paper Series 8410, CESifo.
    3. de Rassenfosse, Gaétan & Pellegrino, Gabriele & Raiteri, Emilio, 2024. "Do patents enable disclosure? Evidence from the invention secrecy act," International Journal of Industrial Organization, Elsevier, vol. 92(C).
    4. Danzer, Alexander M. & Feuerbaum, Carsten & Gaessler, Fabian, 2024. "Labor supply and automation innovation: Evidence from an allocation policy," Journal of Public Economics, Elsevier, vol. 235(C).
    5. Daniel P. Gross, 2023. "The Hidden Costs of Securing Innovation: The Manifold Impacts of Compulsory Invention Secrecy," Management Science, INFORMS, vol. 69(4), pages 2318-2338, April.

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    More about this item

    Keywords

    cumulative innovation; disclosure; intellectual property; Uniform Trade Secrets Act; visibility;
    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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