TY  - JOUR
AU  - Pakes,Ariel
TI  - Patents as Options:  Some Estimates of the Value of Holding European    Patent Stocks
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1340
PY  - 1986
Y2  - November 1986
UR  - http://www.nber.org/papers/w1340
L1  - http://www.nber.org/papers/w1340.pdf
N1  - Author contact info:
Ariel Pakes
Department of Economics
Harvard University
Littauer Room 117
Cambridge, MA 02138
Tel: 617/495-5320
Fax: 617/496-7352
E-Mail: apakes@fas.harvard.edu
AB  - In many countries holders of patents must pay an annual renewal fee in order to keep their patents in force. This paper uses data on the proportion of patents renewed, and the renewal fees faced by, post World War II cohorts of patents in France, the United Kingdom, and Germany, in conjunction with a model of patent holders' renewal decisions, to estimate the returns earned from holding patents in these countries. Since patents are often applied for at a nearly stage in the innovation process, the model allows agents to be uncertain about the sequence of returns that will be earned if the patent is kept inforce. Formally, then, the paper presents and solves a discrete choice optimal stochastic control model, derives the implications of the model on aggregate behaviour, and then estimates the parameters of the model from aggregate data. The estimates enable a detailed description of the evolution of the distribution of returns earned from holding patents over their life spans,and calculations of both; the annual returns earned from holding the patents still in force (or the patent stocks) in the alternative countries, and the distribution of the discounted value of returns earned from holding the patents in a cohort.
ER  -