Pricing Patents through Citations

Fernando Leiva B. ()
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Fernando Leiva B.: Economics University of Iowa
Authors registered in the RePEc Author Service: Fernando J. Leiva Bertran ()

No 834, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: This paper provides formal treatment to the idea of patenting as a form of market stealing between R&D firms. It extends the creative destruction literature by allowing innovations to build off each other forming a network of ideas. Patent citations keep track of this network. The theory maps the distribution of productivities in the development of new ideas onto the distribution of patent values through patent citations. If productivities are drawn from a Pareto-Levy distribution then the distribution of patent values also falls within this class. The theory is then applied to data on US patent citations. Model-based valuations support the assumption of Pareto-distributed productivities. As an added feature, model-based valuations outperform citation counts (the traditional measure) as a proxy for patent values

Keywords: Patents; Innovation; R&D; Networks (search for similar items in EconPapers)
JEL-codes: O31 O33 D85 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-mic and nep-net
Date: 2006-12-03
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