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Cross-disciplinary Seminar Series in
Strategy and Entrepreneurship
Ashish Arora, Carnegie Mellon
(bio)
Nov 4, Room 1203, 1:30-3pm
Patent Protection, Complementary
Assets, and Firms' Incentives
for Technology Licensing
(full document)
Ashish Arora* and Marco
Ceccagnoli+
*Carnegie Mellon University,
Pittsburgh, USA
+INSEAD, Fontainebleau, France
June 6, 2005
Abstract
This paper analyzes the
relationship between technology
licensing and the effectiveness
of patent protection. Using the
1994 Carnegie Mellon survey on
industrial R&D in the United
States, we develop and test a
simple structural model in which
the patenting and licensing
decisions are jointly
determined. We find that
increases in the effectiveness
of patent protection increases
licensing propensity, but only
when the firm lacks specialized
complementary assets required to
commercialize new technologies.
In contrast, for firms with
specialized complementary
assets, increases in patent
effectiveness increase patenting
propensity but reduce the
propensity to license. We
present systematic
cross-industry empirical
support for the proposition that
intellectual property protection
is a key determinant of the
vertical boundaries of the firm
and the market for technology,
but that its impact is mediated
by a firm’s ownership of
specialized complementary
assets.
For information about the series,
contact Dianne Fox at
dfox@rhsmith.umd.edu.
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