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Pricing Patents through Citations

Author

Listed:
  • Fernando Leiva B.

    (Economics University of Iowa)

Abstract

This paper provides formal treatment to the idea of patenting as a form of market stealing between R&D firms. It extends the creative destruction literature by allowing innovations to build off each other forming a network of ideas. Patent citations keep track of this network. The theory maps the distribution of productivities in the development of new ideas onto the distribution of patent values through patent citations. If productivities are drawn from a Pareto-Levy distribution then the distribution of patent values also falls within this class. The theory is then applied to data on US patent citations. Model-based valuations support the assumption of Pareto-distributed productivities. As an added feature, model-based valuations outperform citation counts (the traditional measure) as a proxy for patent values

Suggested Citation

  • Fernando Leiva B., 2006. "Pricing Patents through Citations," 2006 Meeting Papers 834, Society for Economic Dynamics.
    • Handle: RePEc:red:sed006:834
    as

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    References listed on IDEAS

    as
    1. Hopenhayn, H.A. & Mitchell, M.F., 1999. "Innovation Fertility and Patent Design," Papers 303, Minnesota - Center for Economic Research.
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    7. Hugo Hopenhayn & Gerard Llobet & Matthew Mitchell, 2006. "Rewarding Sequential Innovators: Prizes, Patents, and Buyouts," Journal of Political Economy, University of Chicago Press, vol. 114(6), pages 1041-1068, December.
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    11. Samuel S. Kortum, 1997. "Research, Patenting, and Technological Change," Econometrica, Econometric Society, vol. 65(6), pages 1389-1420, November.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Nir Jaimovich & Sergio Rebelo, 2017. "Nonlinear Effects of Taxation on Growth," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 265-291.
    2. Christian Ghiglino, 2005. "Balanced Growth with a Network of Ideas," Working Papers 546, Queen Mary University of London, School of Economics and Finance.
    3. Christian Ghiglino, 2005. "Balanced Growth with a Network of Ideas," Working Papers 546, Queen Mary University of London, School of Economics and Finance.
    4. Antonio Minniti & Carmelo Parello & Paul Segerstrom, 2013. "A Schumpeterian growth model with random quality improvements," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 755-791, March.
    5. John Laitner & Dmitriy Stolyarov, 2013. "Derivative Ideas And The Value Of Intangible Assets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(1), pages 59-95, February.

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    More about this item

    Keywords

    Patents; Innovation; R&D; Networks;
    All these keywords.

    JEL classification:

    • 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
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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