Limits to Political Capture: Evidence from Patent Grants, Disclosures, and Litigation

58 Pages Posted: 27 Jul 2022 Last revised: 4 Mar 2024

See all articles by Christine Cuny

Christine Cuny

New York University (NYU) - Leonard N. Stern School of Business

Mihir N. Mehta

University of Michigan, Stephen M. Ross School of Business

Wanli Zhao

Bocconi University - Department of Accounting

Date Written: July 1, 2022

Abstract

Substantial evidence suggests that regulatory agencies in the U.S. can be captured by the politicians who oversee them. We provide novel evidence of a federal agency in which capture is limited: the United States Patent and Trademark Office. Although patent applications from politically connected firms are more likely to be approved despite being of lower ex-post quality, additional analyses suggest these outcomes are not indicative of capture. In particular, the disclosure quality of connected patents' legal claims increases through the review process, narrowing the scope of the patents and constraining the intellectual property rights. Furthermore, connected patents are no more likely than others to be litigated ex-post, suggesting these patent grants are not spurious. Our findings provide insights into how the design of a regulator can limit the benefits that accrue to politically connected firms.

Keywords: JEL classification: H1, M40, O30, O32, P14 Innovation, Judiciary Committee, Political Economy, USPTO, Information Flows

JEL Classification: G38, H11, L51, M41, M48

Suggested Citation

Cuny, Christine and Mehta, Mihir N. and Zhao, Wanli, Limits to Political Capture: Evidence from Patent Grants, Disclosures, and Litigation (July 1, 2022). Available at SSRN: https://ssrn.com/abstract=4170209 or http://dx.doi.org/10.2139/ssrn.4170209

Christine Cuny

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Ste. 10-91
New York, NY NY 10012
United States
212-998-0423 (Phone)

Mihir N. Mehta (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Wanli Zhao

Bocconi University - Department of Accounting ( email )

Via Roentgen 1
Milan, 20136
Italy

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