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How Reliable Is the Market for Technology?

Author

Listed:
  • Vincenzo Palermo

    (Accenture)

  • Matthew J. Higgins

    (Georgia Institute of Technology and NBER)

  • Marco Ceccagnoli

    (Georgia Institute of Technology)

Abstract

Research has focused on why and when firms access external technology markets. Less is known about the reliability of patents attached to licensed technologies during litigation. Unreliable patents expose a firm to loss of downstream revenues. We address this by constructing a data set of patent litigation in the pharmaceutical industry and exploit a change in patent law that exogenously increased the probability of litigation. We find that licensed patents are more likely to fall during litigation. This effect is isolated to firms with fewer intellectual property capabilities and less patenting experience, suggesting that benefits from external technology are not shared equally.

Suggested Citation

  • Vincenzo Palermo & Matthew J. Higgins & Marco Ceccagnoli, 2019. "How Reliable Is the Market for Technology?," The Review of Economics and Statistics, MIT Press, vol. 101(1), pages 107-120, March.
    • Handle: RePEc:tpr:restat:v:101:y:2019:i:1:p:107-120
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    Cited by:

    1. Peters, Bettina & Marks, Hannes & Trunschke, Markus & Grimpe, Christoph & Sofka, Wolfgang & Czarnitzki, Dirk, 2023. "Schwerpunktstudie Technologiemärkte," Studien zum deutschen Innovationssystem 9-2023, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    2. Branstetter, Lee & Chatterjee, Chirantan & Higgins, Matthew J., 2022. "Generic competition and the incentives for early-stage pharmaceutical innovation," Research Policy, Elsevier, vol. 51(10).
    3. Manuel Hermosilla, 2021. "Rushed Innovation: Evidence from Drug Licensing," Management Science, INFORMS, vol. 67(1), pages 257-278, January.
    4. Matthew J. Higgins & Mathias J. Kronlund & Ji Min Park & Joshua Pollet, 2020. "The Role of Assets In Place: Loss of Market Exclusivity and Investment," NBER Working Papers 27588, National Bureau of Economic Research, Inc.
    5. Cabaleiro-Cerviño, Goretti & Burcharth, Ana, 2020. "Licensing agreements as signals of innovation: When do they impact market value?," Technovation, Elsevier, vol. 98(C).

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