Do Patent Pools Encourage Innovation? Evidence from 20 U.S. Industries Under the New Deal
California State University, East Bay - Department of Economics
Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)
NBER Working Paper No. w18316
Patent pools, which allow competing firms to combine their patents, have emerged as a prominent mechanism to resolve litigation when multiple firms own patents for the same technology. This paper takes advantage of a window of regulatory tolerance under the New Deal to investigate the effects of pools on innovation within 20 industries. Difference-in-differences regressions imply a 16 percent decline in patenting in response to the creation of a pool. This decline is driven by technology fields in which a pool combined patents for substitute technologies by competing firms, suggesting that unregulated pools may discourage innovation by weakening competition to improve substitutes.
Number of Pages in PDF File: 44
Date posted: August 18, 2012