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Why do patents facilitate trade in technology? Testing the disclosure and appropriation effects

Gaétan de Rassenfosse, Alfons Palangkaraya () and Elizabeth Webster ()

Working Papers from Chair of Innovation and IP Policy

Abstract: Evidence suggests that patents facilitate technology transactions but the reasons for the effect are unclear. Patents may assist trade in technology by either: (i) protecting buyers against the expropriation of the idea (the 'appropriation effect'); or (ii) increasing information sharing during the negotiation phase through publication of technical details contained in the patent document (the 'disclosure effect'). We estimate the strength of both effects using exact matching analysis on a novel dataset of 860 technology transaction negotiations. We find evidence for the appropriation but not the disclosure effect. Technology transaction negotiations involving a granted patent instead of a pending patent (our test for the appropriation effect) are significantly more likely to be successfully completed. The appropriation effect is stronger in technology fields where patent protection is known to be more effective such as biotech, chemicals, drugs and medical.

Keywords: appropriability; disclosure; licensing; market for technology; patent (search for similar items in EconPapers)
JEL-codes: O34 O38 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2016-04
New Economics Papers: this item is included in nep-ino, nep-pr~ and nep-tid
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