Working Paper: NBER ID: w21455
Authors: Bronwyn H. Hall; Christian Helmers; Georg von Graevenitz
Abstract: We analyze the effect of patent thickets on entry into technology areas by firms in the UK. We present a model that describes incentives to enter technology areas characterized by varying technological opportunity, complexity, and the potential for hold-up due to the presence of patent thickets. We show empirically that our measure of patent thickets is associated with a reduction of first time patenting in a given technology area controlling for the level of technological complexity and opportunity. Technological areas characterized by more technological complexity and opportunity, in contrast, see more entry. Our evidence indicates that patent thickets raise entry costs, which leads to less entry into technologies regardless of a firm’s size.
Keywords: patent thickets; firm entry; technological opportunity; complexity
JEL Codes: K11; L20; O31; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Patent thickets (O34) | increased entry costs (L11) |
| increased entry costs (L11) | reduced firm entry (L11) |
| Patent thickets (O34) | reduced firm entry (L11) |
| Greater technological complexity (O39) | increased firm entry (L26) |
| Greater technological opportunity (O39) | increased firm entry (L26) |