NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Impact of Uncertain Intellectual Property Rights on the Market For Ideas: Evidence From Patent Grant Delays

Joshua S. Gans, David H. Hsu, Scott Stern

NBER Working Paper No. 13234
Issued in July 2007
NBER Program(s):   IO   PR

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.

download in pdf format
   (273 K)

email paper

This paper is available as PDF (273 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w13234

Published: Joshua S. Gans & David H. Hsu & Scott Stern, 2008. "The Impact of Uncertain Intellectual Property Rights on the Market for Ideas: Evidence from Patent Grant Delays," Management Science, INFORMS, vol. 54(5), pages 982-997, May.

Users who downloaded this paper also downloaded these:
Gans, Hsu, and Stern w7851 When Does Start-Up Innovation Spur the Gale of Creative Destruction?
Branstetter, Fisman, Foley, and Saggi w13033 Intellectual Property Rights, Imitation, and Foreign Direct Investment: Theory and Evidence
Murray and Stern w11465 Do Formal Intellectual Property Rights Hinder the Free Flow of Scientific Knowledge? An Empirical Test of the Anti-Commons Hypothesis
Arrow Economic Welfare and the Allocation of Resources for Invention
Branstetter and Saggi w15393 Intellectual Property Rights, Foreign Direct Investment, and Industrial Development
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us