Working Paper: NBER ID: w19679
Authors: Ajay Agrawal; Iain Cockburn; Laurina Zhang
Abstract: Using novel survey data on technology licensing, we report the first empirical evidence linking the three main sources of failure emphasized in the market design literature (lack of market thickness, congestion, lack of market safety) to deal outcomes. We disaggregate the licensing process into three stages and find that although lack of market thickness and deal failure are correlated in the first stage, they are not in the latter stages, underscoring the bilateral monopoly conditions under which negotiations over intellectual property often occur. In contrast, market safety is only salient in the final stage. Several commonly referenced bargaining frictions (congestion) are salient, particularly in the second stage. Also, universities and firms differ in the stage during which they are most likely to experience deal failure.
Keywords: technology licensing; market thickness; market safety; bargaining frictions
JEL Codes: L24; O32; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lack of market thickness (D52) | lower deal success in the first stage (L14) |
| lack of market safety (G10) | lower deal success in the final stage (L14) |
| bargaining frictions (J52) | deal failures during the negotiation stage (L14) |