Law and the Boundaries of Technology-Intensive Firms

41 Pages Posted: 11 Apr 2005 Last revised: 21 Aug 2009

Oren Bar-Gill

Harvard Law School

Gideon Parchomovsky

University of Pennsylvania Law School; Bar Ilan University - Faculty of Law

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Abstract

Arrow's disclosure paradox implies that information that is not afforded legal protection cannot be bought or sold on the market. This paper emphasizes the important relationship between the paradox of disclosure and the boundaries of the firm question. Only legally protected inventions, i.e., patented inventions, may be traded; pre-patent stages of the innovation process may not. Consequently, by force of law, rather than by the guidance of economic principle, pre-patent innovation must be carried out within the boundaries of a single firm.

Keywords: Boundaries of the firm, disclosure paradox, intellectual property law

JEL Classification: D23, K11, L22

Suggested Citation

Bar-Gill, Oren and Parchomovsky, Gideon, Law and the Boundaries of Technology-Intensive Firms. University of Pennsylvania Law Review, Vol. 157, Pg. 1649, 2009; NYU Law and Economics Research Paper No. 04-06; U of Penn, Inst for Law & Econ Research Paper 05-10. Available at SSRN: https://ssrn.com/abstract=702464 or http://dx.doi.org/10.2139/ssrn.702464

Oren Bar-Gill (Contact Author)

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States

Gideon Parchomovsky

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-1603 (Phone)

Bar Ilan University - Faculty of Law ( email )

Ramat Gan 52900
Israel
972-2-5317078 (Phone)

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