To Be Sure or Not to Be Preempted?: An Empirical Study on the Deferred Examination System in Korea

39 Pages Posted: 19 Apr 2017

See all articles by Siwei Cao

Siwei Cao

Beijing Normal University

Zhen Lei

Pennsylvania State University

Jun B. Oh

Inha University - Department of Economics

Date Written: March 1, 2017

Abstract

This paper investigates firm behaviors on examination request under the deferred patent examination system in Korea. We examine firm decisions on whether and when to request patent examinations when they face both uncertainty about invention’s value and market competition. We find that the examination request in Korea has an interesting bi-polar distribution, and both uncertainty about an invention’s value and market competition have significant impacts on firm’s decision for examination request. Applicants tend to utilize option value of waiting when uncertainty is high, but market competition attenuates the option value: the higher the competition, the less likely applicants are to delay or forego examination. Our study extends the empirical literature on deferred examination system but also provides a more comprehensive understanding on the irreversible investment decision under both uncertainty and competition.

Keywords: deferred patent examination system, uncertainty, competition, real options, irreversible investment

JEL Classification: D22, L19, O30, O34

Suggested Citation

Cao, Siwei and Lei, Zhen and Oh, Jun B., To Be Sure or Not to Be Preempted?: An Empirical Study on the Deferred Examination System in Korea (March 1, 2017). Available at SSRN: https://ssrn.com/abstract=2954362 or http://dx.doi.org/10.2139/ssrn.2954362

Siwei Cao

Beijing Normal University ( email )

19 Xinjiekou Outer St
Haidian District
Beijing, Guangdong 100875
China

Zhen Lei

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Jun B. Oh (Contact Author)

Inha University - Department of Economics ( email )

253 Yonghyun-dong
Nam-gu Incheon 402-751
Korea

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