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Acquisitions for Sleep

Pehr-Johan Norbäck (), Lars Persson and Olofsson Charlotta ()
Additional contact information
Olofsson Charlotta: Lund University and Research Institute of Industrial Economics, Grevgatan 34, Stockholm10215, Sweden

The B.E. Journal of Economic Analysis & Policy, 2020, vol. 20, issue 2, 13

Abstract: Within the policy debate, there is a fear that large incumbent firms buy small firms’ inventions to ensure that they are not used in the market. We show that such “acquisitions for sleep” can occur if and only if the quality of a process invention is small; otherwise, the entry profit will be higher than the entry-deterring value. We then show that the incentive for acquiring for the purpose of putting a patent to sleep decreases when the intellectual property law is stricter because the profit for the entrant then increases more than the entry-deterring value does.

Keywords: acquisitions; innovation; sleeping patents; IP law; ownership (search for similar items in EconPapers)
JEL-codes: G24 L1 L2 M13 O3 (search for similar items in EconPapers)
Date: 2020
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