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A structural model on the impact of prediscovery licensing and research joint ventures on innovation and product market efficiency

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  • Siebert, Ralph Bernd

Abstract

Using a novel database on prediscovery licensing agreements (one type of R&D cooperation) as well as detailed firm-level and semiconductor market-specific information, we estimate the impact of prediscovery licensing agreements (PDLAs) on innovation and product market efficiency. Our results show that PDLAs reduce innovative activity in the semiconductor industry by 10 percent, or 4089 patents, throughout the 1989–1999 period. On the contrary, research joint ventures (a different type of R&D cooperation) increase innovative activity. Based on a structural model, we provide evidence that PDLAs increase production costs and semiconductor prices by 1 percent, which results in customers paying an additional $1.1 billion for semiconductors per year. Beyond the common concern that R&D cooperations facilitate coordination activities in product markets via price fixing, our study highlights that PDLAs can be used as an instrument to coordinate R&D activities, which can reduce innovation activity and increase costs and prices.

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  • Siebert, Ralph Bernd, 2017. "A structural model on the impact of prediscovery licensing and research joint ventures on innovation and product market efficiency," International Journal of Industrial Organization, Elsevier, vol. 54(C), pages 89-124.
    • Handle: RePEc:eee:indorg:v:54:y:2017:i:c:p:89-124
    DOI: 10.1016/j.ijindorg.2017.06.008
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    3. Rouven E. Haschka & Helmut Herwartz, 2022. "Endogeneity in pharmaceutical knowledge generation: An instrument‐free copula approach for Poisson frontier models," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(4), pages 942-960, November.

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    More about this item

    Keywords

    Antitrust; Collusion; Prediscovery licensing; Research joint ventures; R&D cooperation; Strategic alliances;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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