Quick or Broad Patents? Evidence from U.S. Startups
76 Pages Posted: 8 Mar 2020 Last revised: 9 Nov 2021
Date Written: June 21, 2021
We study the effects of patent scope and review times on startups and externalities on their rivals. We leverage the quasi-random assignment of U.S. patent applications to examiners and find that grant delays reduce a startup’s employment and sales growth, chances of survival, access to external capital, and future innovation. Delays also harm the growth, access to external capital, and follow-on innovation of the patentee’s rivals, suggesting that quick patents enhance both inventor rewards and generate positive externalities. Broader scope increases a startup’s future growth (conditional on survival) and innovation but imposes negative externalities on its rivals’ growth.
Keywords: Patents, innovation, scope, entrepreneurship, venture capital
JEL Classification: D23, G24, L26, O34
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