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