Working Paper: NBER ID: w13234
Authors: Joshua S. Gans; David H. Hsu; Scott Stern
Abstract: This paper considers the impact of the intellectual property (IP) system on the timing of cooperation/licensing by start-up technology entrepreneurs. If the market for technology licenses is efficient, the timing of licensing is independent of whether IP has already been granted. In contrast, the need to disclosure complementary (yet unprotected) knowledge, asymmetric information, or search costs may retard efficient technology transfer. In these cases, reductions in uncertainty surrounding the scope and extent of IP rights may facilitate trade in the market for ideas. We employ a dataset combining information about cooperative licensing and the timing of patent allowances (the administrative event when patent rights are clarified). While pre-allowance licensing does occur, the hazard rate for achieving a cooperative licensing agreement significantly increases after patent allowance. Moreover, the impact of the patent system depends on the strategic and institutional environment in which firms operate. Patent allowance seems to play a particularly important role for technologies with longer technology lifecycles or that lack alternative mechanisms such as copyright, reputation, or brokers. The findings suggest that imperfections in the market for ideas may be important, and that formal IP rights may facilitate gains from technological trade.
Keywords: Intellectual Property; Patent; Technology Transfer; Licensing; Innovation
JEL Codes: L24; L26; O32; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Patent allowance (D45) | Hazard rate of achieving a licensing agreement (D45) |
| Patent allowance (D45) | Cooperative commercialization (O36) |
| Patent allowance (D45) | Licensing behavior (D45) |
| Access to rich knowledge broker networks (D85) | Impact of patent allowance on licensing hazard rate (D45) |
| Longer lifecycles technologies (O30) | Impact of patent allowance on licensing hazard rate (D45) |