Working Paper: NBER ID: w22631
Authors: Yasin Ozcan; Shane Greenstein
Abstract: Using patents as indicators of inventive activity, this article characterizes the concentration of origins of invention from 1976 to 2010, and how these changed over time. The analysis finds pervasive deconcentration in virtually every area related to ICT, but it can explain only a small part of this trend. Deconcentration happens despite the role of lateral entry by existing firms. New firm entry drives part of the deconcentration, but this alone cannot explain the change. A single supply factor in the market for ideas, such as the breakup of AT&T, also cannot explain the trend. Finally, eleven percent of patents change hands through mergers and acquisitions activity, but this does not make up for the declines in concentration in the origins of invention.
Keywords: ICT; deconcentration; patents; innovation
JEL Codes: G34; L96; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| new firm entry (M13) | deconcentration of inventive ideas (O36) |
| lateral entry (J62) | deconcentration of inventive ideas (O36) |
| M&A activity (G34) | patent stock transfers (O34) |
| M&A activity does not significantly reverse deconcentration (G34) | deconcentration of inventive ideas (O36) |
| decline of major firms (IBM, Motorola) (L63) | deconcentration of inventive ideas (O36) |
| top twenty-five firms' share of new patents decreased (O39) | deconcentration of inventive ideas (O36) |