IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/88081.html
   My bibliography  Save this paper

Patent rights, innovation, and firm exit

Author

Listed:
  • Galasso, Alberto
  • Schankerman, Mark

Abstract

We study the causal impact of patent invalidation on subsequent innovation and exit by patent holders. The analysis uses patent litigation data from the US Federal Circuit Court and exploits random allocation of judges to control for endogeneity of the decision. Invalidation causes patent holders to reduce patenting over a five-year window by 50% on average, but the effect is heterogeneous. The impact is large for small- and medium-sized firms, particularly where they face many large competitors, and for patents central to their research portfolio. We find no significant effect for large firms. Invalidation also increases exit from patenting by small firms.

Suggested Citation

  • Galasso, Alberto & Schankerman, Mark, 2018. "Patent rights, innovation, and firm exit," LSE Research Online Documents on Economics 88081, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:88081
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/88081/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
    2. Saul Lach & Mark Schankerman, 2008. "Incentives and invention in universities," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 403-433, June.
    3. David J. Ravenscraft & William F. Long, 2000. "Paths to Creating Value in Pharmaceutical Mergers," NBER Chapters, in: Mergers and Productivity, pages 287-326, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hellmann, Thomas, 2007. "The role of patents for bridging the science to market gap," Journal of Economic Behavior & Organization, Elsevier, vol. 63(4), pages 624-647, August.
    2. Matsui, Kenji, 2020. "Optimal bargaining timing of a wholesale price for a manufacturer with a retailer in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 287(1), pages 225-236.
    3. MARINI, Marco, 1996. "Property Rights and Market : Employee Privatization as a Cooperative Bargaining Process," LIDAM Discussion Papers CORE 1996023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Grossman, Gene M & Helpman, Elhanan, 1995. "The Politics of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 85(4), pages 667-690, September.
    5. Erkki Koskela & Ronnie Schöb, 2002. "Alleviating Unemployment: The Case for Green Tax Reforms," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 20, pages 355-378, Edward Elgar Publishing.
    6. Cornelia Lawson, 2013. "Academic Inventions Outside the University: Investigating Patent Ownership in the UK," Industry and Innovation, Taylor & Francis Journals, vol. 20(5), pages 385-398, July.
    7. Manzini, Paola & Mariotti, Marco, 2005. "Alliances and negotiations," Journal of Economic Theory, Elsevier, vol. 121(1), pages 128-141, March.
    8. Brown, Alessio J.G. & Merkl, Christian & Snower, Dennis J., 2011. "Comparing the effectiveness of employment subsidies," Labour Economics, Elsevier, vol. 18(2), pages 168-179, April.
    9. Jahn, Eric & Prüfer, Jens, 2008. "Interconnection and competition among asymmetric networks in the Internet backbone market," Information Economics and Policy, Elsevier, vol. 20(3), pages 243-256, September.
    10. Steinar Holden, 1998. "Wage Drift and the Relevance of Centralised Wage Setting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(4), pages 711-731, December.
    11. Hans K. Hvide & Benjamin F. Jones, 2018. "University Innovation and the Professor's Privilege," American Economic Review, American Economic Association, vol. 108(7), pages 1860-1898, July.
    12. Lacetera, Nicola & Macis, Mario, 2008. "Motivating Altruism: A Field Study," IZA Discussion Papers 3770, Institute of Labor Economics (IZA).
    13. Richard Jensen, 2012. "University Startups and Entrepreneurship: New Data, New Results," Working Papers 009, University of Notre Dame, Department of Economics, revised Jul 2012.
    14. Wipo, 2011. "World Intellectual Property Report 2011- The Changing Face of Innovation," WIPO Economics & Statistics Series, World Intellectual Property Organization - Economics and Statistics Division, number 2011:944, April.
    15. de Rassenfosse, Gaétan & Schoen, Anja & Wastyn, Annelies, 2014. "Selection bias in innovation studies: A simple test," Technological Forecasting and Social Change, Elsevier, vol. 81(C), pages 287-299.
    16. Ignat Stepanok, 2016. "Creative destruction and unemployment in an open economy model," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(3), pages 931-948, August.
    17. Carlsson, Mikael & Westermark, Andreas, 2011. "The New Keynesian Phillips Curve and staggered price and wage determination in a model with firm-specific labor," Journal of Economic Dynamics and Control, Elsevier, vol. 35(4), pages 579-603, April.
    18. Dávila, J. & Eeckhout, J., 2008. "Competitive bargaining equilibrium," Journal of Economic Theory, Elsevier, vol. 139(1), pages 269-294, March.
    19. Izat B. Baybusinov & Enrico Maria Fenoaltea & Yi-Cheng Zhang, 2022. "Negotiation problem," Papers 2201.12619, arXiv.org.
    20. Sniekers, F.J.T., 2013. "Endogenous Beveridge cycles and the volatility of unemployment," CeNDEF Working Papers 13-12, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.

    More about this item

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:88081. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.