Physical Constraints on Markets for Ideas

50 Pages Posted: 22 Jul 2022

See all articles by Gaétan de Rassenfosse

Gaétan de Rassenfosse

École Polytechnique Fédérale de Lausanne

Laurie Ciaramella

affiliation not provided to SSRN

Abstract

This paper analyzes how travel time between contracting parties slows down transactions on markets for ideas. We put forward a model of buyer-seller trade over ideas and test the model’s predictions on a novel dataset of patent sales and licensing deals in France. To address endogeneity concerns, we construct an instrument that exploits the 1982 Deferre law, which marked the beginning of territorial decentralization in France, and the introduction of high-speed train lines. We also instrument travel time with horseback travel time around 1780. We find robust evidence that travel time delays transactions on markets for ideas to a sizeable extent, especially for deals involving SMEs and first-time buyer-seller dyads.

Keywords: markets for technology, patent licensing, patent sales, geography, transaction costs

Suggested Citation

de Rassenfosse, Gaétan and Ciaramella, Laurie, Physical Constraints on Markets for Ideas. Available at SSRN: https://ssrn.com/abstract=4169908

Gaétan De Rassenfosse (Contact Author)

École Polytechnique Fédérale de Lausanne ( email )

Station 5
Odyssea 1.04
1015 Lausanne, CH-1015
Switzerland

Laurie Ciaramella

affiliation not provided to SSRN ( email )

No Address Available

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