Patents as Negotiating Assets: Patenting Versus Secrecy for Startups

Andreas Panagopoulos, In-Uck Park

Research output: Contribution to journalArticle (Academic Journal)peer-review

2 Citations (Scopus)
120 Downloads (Pure)

Abstract

We analyse a sequential innovation model and show that relatively narrow patent rights can facilitate a market in which startups' patents are traded as negotiating assets. In this market, the trade of patents, on top of monopoly profits, conveys an extra surplus from the patents' capacity to affect future tech-transfer negotiations. This surplus, which stems from a patent's potential ability to exclude infringers and the corresponding enforcement spillovers that patents confer, may incentivize innovations that would not have been possible under trade secrecy, improving social welfare.
Original languageEnglish
Pages (from-to)2876-2894
Number of pages19
JournalEconomic Journal
Volume128
Issue number615
Early online date18 Nov 2017
DOIs
Publication statusPublished - Nov 2018

Structured keywords

  • ECON Microeconomic Theory

Keywords

  • Patents
  • trade secrets
  • startups
  • takeovers

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