TY  - JOUR
AU  - Cockburn,Iain M.
AU  - MacGarvie,Megan J.
TI  - Entry and Patenting in the Software Industry 
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12563
PY  - 2006
Y2  - October 2006
UR  - http://www.nber.org/papers/w12563
L1  - http://www.nber.org/papers/w12563.pdf
N1  - Author contact info:
Iain M. Cockburn
School of Management
Boston University
595 Commonwealth Ave
Boston, MA 02215
Tel: 617/588-1486
Fax: 815/550-2353
E-Mail: cockburn@bu.edu

Megan MacGarvie
Boston University
School of Management
595 Commonwealth Avenue, Room 522H
Boston, MA  02215
Tel: 617/353-9490
Fax: 617/353-6667
E-Mail: mmacgarv@bu.edu
AB  - To what extent are firms kept out of a market by patents covering related technologies? Do patents held by potential entrants make it easier to enter markets? We estimate the empirical relationship between market entry and patents for 27 narrowly defined categories of software products during the period 1990-2004.  Controlling for demand, market structure, average patent quality, and other factors, we find that a 10% increase in the number of patents relevant to market reduces the rate of entry by 3-8%, and this relationship intensified following expansions in the patentability of software in the mid-1990s. However, potential entrants with patent applications relevant to a market are more likely to enter it. Finally, patents appear to substitute for complementary assets in the entry process, as patents have both greater entry-deterring and entry-promoting effects for firms without prior experience in other markets. 
ER  -