Deals Not Done: Sources of Failure in the Market for Ideas

Ajay Agrawal, Iain Cockburn and Laurina Zhang

No 19679, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using novel survey data on technology licensing, we report the first empirical evidence linking the three main sources of failure emphasized in the market design literature (lack of market thickness, congestion, lack of market safety) to deal outcomes. We disaggregate the licensing process into three stages and find that although lack of market thickness and deal failure are correlated in the first stage, they are not in the latter stages, underscoring the bilateral monopoly conditions under which negotiations over intellectual property often occur. In contrast, market safety is only salient in the final stage. Several commonly referenced bargaining frictions (congestion) are salient, particularly in the second stage. Also, universities and firms differ in the stage during which they are most likely to experience deal failure.

JEL-codes: L24 O32 O34 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-ipr and nep-pr~
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Citations: View citations in EconPapers (3)

Published as Ajay Agrawal & Iain Cockburn & Laurina Zhang, 2015. "Deals not done: Sources of failure in the market for ideas," Strategic Management Journal, Wiley Blackwell, vol. 36(7), pages 976-986, 07.

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