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Science and the Market for Technology

Author

Listed:
  • Ashish Arora

    (Fuqua School of Business, Duke University, Durham, North Carolina 27708; National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • Sharon Belenzon

    (Fuqua School of Business, Duke University, Durham, North Carolina 27708; National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • Jungkyu Suh

    (Fuqua School of Business, Duke University, Durham, North Carolina 27708)

Abstract

Well-functioning markets for technology (MFT) allow inventors to sell their inventions to others that may derive more value from them. We argue that the growing use of science in inventions enhances MFT. Science-based inventions have higher gains from trade and lower transaction costs. This relationship is amplified in equilibrium because science-based inventions are also likely to feature smaller inventors with a greater propensity to trade. Using large-scale data, we show that patents citing science are more likely to be traded, especially for novel patents and for smaller inventors. We conclude that the growing use of science in invention is beneficial by encouraging the expansion of MFT and supporting a division of innovative labor.

Suggested Citation

  • Ashish Arora & Sharon Belenzon & Jungkyu Suh, 2022. "Science and the Market for Technology," Management Science, INFORMS, vol. 68(10), pages 7176-7201, October.
    • Handle: RePEc:inm:ormnsc:v:68:y:2022:i:10:p:7176-7201
    DOI: 10.1287/mnsc.2021.4268
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    Cited by:

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    3. Kim, Young-Choon & Kotha, Reddi & Rhee, Mooweon, 2024. "Do firms with technological capabilities rush in? Evidence from the timing of licensing of Stanford inventions," Journal of Business Research, Elsevier, vol. 178(C).

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    More about this item

    Keywords

    science; market for technology; innovation; science-based entrepreneurship;
    All these keywords.

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O36 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Open Innovation

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