Verifying High Quality: Entry for Sale

Pehr-Johan Norbäck, Lars Persson and Roger Svensson

No 1186, Working Paper Series from Research Institute of Industrial Economics

Abstract: When and how do entrepreneurs sell their inventions? To address this issue, we develop an endogenous entry-sale asymmetric information oligopoly model. We show that lowquality inventions are sold directly or used for own entry. Inventors who sell post-entry use entry to credibly reveal information on quality. Incumbents are then willing to pay high prices for high-quality inventions to preempt rivals from obtaining them. Using Swedish data on patents granted to small firms and individuals, we find evidence that high-quality inventions are sold under preemptive bidding competition, post entry.

Keywords: Acquisitions; Innovation; Start-ups; Ownership; Patents; Verification; Quality (search for similar items in EconPapers)
JEL-codes: G24 L10 L20 M13 O30 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2017-10-30
New Economics Papers: this item is included in nep-com, nep-ent, nep-ind, nep-ino and nep-sbm
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Citations: View citations in EconPapers (1)

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Working Paper: Verifying High Quality: Entry for Sale (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1186

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