Competition and the Efficiency of Markets for Technology

Marie-Laure Allain, Emeric Henry and Margaret Kyle
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Margaret Kyle: CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique

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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.

Keywords: Competition; Technology (search for similar items in EconPapers)
Date: 2016-04
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Citations: View citations in EconPapers (2)

Published in Management Science, 2016, 62 (4), pp.1000-1019. ⟨10.1287/mnsc.2015.2191⟩

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Related works:
Journal Article: 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:hal:spmain:hal-03542108

DOI: 10.1287/mnsc.2015.2191

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