Abstract

https://ssrn.com/abstract=2552734
 


 



Patent Trolls as Financial Intermediaries? Experimental Evidence


Stephen Haber


Stanford University - Hoover Institution and Political Science

Seth H. Werfel


Stanford University, Department of Political Science, Students

September 21, 2016

Economics Letters 149: 64-66, 2016

Abstract:     
Recent work suggests that Patent Assertion Entities (PAEs) — or “patent trolls” — are a new form of financial intermediary. According to this view, individual patent holders are unable to contract with large manufacturers because they lack the financial resources necessary to litigate against infringement. Since individual patent holders are heterogeneous in their constraints and preferences, the market function of PAEs should depend on their specific demands. We conducted an experiment in which subjects from a population of interest were each assigned patents that were infringed by large manufacturers in a hypothetical scenario. We relaxed the financial constraints of some patent holders and evaluated whether this randomized intervention subsequently reduced the demand for PAEs relative to costly litigation. Our results indicate that PAEs served an intermediary function for two groups in our sample: subjects who identified as inventors rather than entrepreneurs, and subjects who were relatively more sensitive to financial losses.

Number of Pages in PDF File: 14

Keywords: Patent trolls, financial intermediation, inventors, experiments

JEL Classification: O34, O32, G23


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Date posted: January 21, 2015 ; Last revised: December 4, 2016

Suggested Citation

Haber, Stephen and Werfel, Seth H., Patent Trolls as Financial Intermediaries? Experimental Evidence (September 21, 2016). Economics Letters 149: 64-66, 2016. Available at SSRN: https://ssrn.com/abstract=2552734 or http://dx.doi.org/10.2139/ssrn.2552734

Contact Information

Stephen H. Haber (Contact Author)
Stanford University - Hoover Institution and Political Science ( email )
Stanford, CA 94305
United States
Seth H. Werfel
Stanford University, Department of Political Science, Students ( email )
Stanford, CA 94305
United States
HOME PAGE: http://www.sethwerfel.net
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