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Does knowledge tradeability make secrecy more attractive than patents? An analysis of IPR strategies and licensing

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  • Frederique Goy
  • Changtao Wang

Abstract

Despite the considerable protection provided by the patent system, a surprisingly small number of firms use patents, instead favouring the use of secrecy. This suggests that natural market forces protect inventors so that formal protections are not necessary. Using firm-level data, this study provides the first empirical evidence on the relationship between knowledge tradeability and the choice of IPR protection methods. Consistent with recent theoretical results, we find that firms engaged in licensing agreements are more likely to use secrecy than patents and that the largest R&D investors tend to use secrecy more than patents. Also, large firms, or manufacturing firms of any size are more likely to use patents, whilst firms that obtain information from internal and non-market sources are more inclined to use secrecy.

Suggested Citation

  • Frederique Goy & Changtao Wang, 2016. "Does knowledge tradeability make secrecy more attractive than patents? An analysis of IPR strategies and licensing," Oxford Economic Papers, Oxford University Press, vol. 68(1), pages 64-88.
    • Handle: RePEc:oup:oxecpp:v:68:y:2016:i:1:p:64-88.
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    File URL: http://hdl.handle.net/10.1093/oep/gpv051
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    Cited by:

    1. Morikawa, Masayuki, 2019. "Innovation in the service sector and the role of patents and trade secrets: Evidence from Japanese firms," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 43-51.
    2. Agbekponou, Kossi Messanh & Cheptea, Angela & Latouche, Karine, 2022. "Retailer-driven value chains in the agri-food sector: An analysis of French firms," Working Papers 329781, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).

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