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http://ssrn.com/abstract=1966530
 
 

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When to Sell Your Idea: Theory and Evidence from the Movie Industry


Hong Luo


Harvard Business School - Strategy Unit

December 30, 2013

Harvard Business School Strategy Unit Working Paper No. 12-039

Abstract:     
When to sell a novel idea is a difficult decision for many innovators. Selling early has financial benefits. But a later-stage sale of a more fully developed idea may attract greater buyer interest and allow the innovator to better protect his idea. I study the decision in a model that features a seller with private information and costly buyer participation. The empirical context of the study is the market for original movie ideas. Consistent with the theory, I find that inexperienced writers are excluded from selling early-stage ideas, restricting their choice to developing the idea fully or abandoning it. By contrast, writers who can attract buyers at any stage sell worse ideas earlier and better ideas later. The results have interesting implications not only for the timing of the sale of ideas, but also for the role of intellectual property protection and the value of intermediaries in the market for ideas.

Number of Pages in PDF File: 37

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Date posted: November 30, 2011 ; Last revised: January 7, 2014

Suggested Citation

Luo, Hong, When to Sell Your Idea: Theory and Evidence from the Movie Industry (December 30, 2013). Harvard Business School Strategy Unit Working Paper No. 12-039. Available at SSRN: http://ssrn.com/abstract=1966530 or http://dx.doi.org/10.2139/ssrn.1966530

Contact Information

Hong Luo (Contact Author)
Harvard Business School - Strategy Unit ( email )
Harvard Business School
Soldiers Field Road
Boston, MA 02163
United States
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