Competition and the Efficiency of Markets for Technology

Marie-Laure Allain, Emeric Henry and Margaret Kyle ()
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Margaret Kyle: MINES ParisTech (CERNA) and PSL Research University, 75272 Paris Cedex 06, France; and Centre for Economic Policy Research, London EC1V 3PZ, United Kingdom

Management Science, 2016, vol. 62, issue 4, 1000-1019

Abstract: The sale of ideas through licensing facilitates the division of labor between the separate activities of research and development. This vertical specialization can improve the overall efficiency of the innovative process. However, these gains depend on the timing of the sale: the buyer of an innovative project should assume development at the stage at which he has an efficiency advantage. Using data from the pharmaceutical industry, we show that competition between potential buyers is related to the timing of licensing. Furthermore, the effect differs by the type of competitor. We then describe a class of models that yields predictions consistent with these empirical patterns. Our key insight is that increased competition may increase licensing delays and hence inefficiency. This paper was accepted by David Hsu, entrepreneurship and innovation .

Keywords: innovation; licensing; market structure; pharmaceuticals; biotechnology (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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http://dx.doi.org/10.1287/mnsc.2015.2191 (application/pdf)

Related works:
Working Paper: Competition and the Efficiency of Markets for Technology (2016)
Working Paper: Competition and the Efficiency of Markets for Technology (2016)
Working Paper: Competition and the Efficiency of Markets for Technology (2013)
Working Paper: Competition and the Efficiency of Markets for Technology (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:62:y:2016:i:4:p:1000-1019

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