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Estimates of Patent Rents from Firm Market Value

James E. Bessen

Boston University - School of Law; Research on Innovation

November 1, 2007

Boston Univ. School of Law Working Paper No. 06-14

The value of patent rents is an important quantity for policy analysis. However, estimates in the literature based on patent renewals might be understated. Market value regressions could provide validation, but they have not had clear theoretical foundations for estimating patent rents. I develop a simple model to make upper bound estimates of patent rents using regressions on Tobin's Q. I test this on a sample of US firms and find it robust to a variety of considerations. My estimates correspond well with estimates based on patentee behavior outside the pharmaceutical industry, but renewal estimates might be understated for pharmaceuticals.

Number of Pages in PDF File: 41

Keywords: technology, patents, innovation, patent value, firm value

JEL Classification: O34, O38, K1

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Date posted: June 28, 2006 ; Last revised: November 29, 2014

Suggested Citation

Bessen, James E., Estimates of Patent Rents from Firm Market Value (November 1, 2007). Boston Univ. School of Law Working Paper No. 06-14. Available at SSRN: https://ssrn.com/abstract=912661 or http://dx.doi.org/10.2139/ssrn.912661

Contact Information

James E. Bessen (Contact Author)
Boston University - School of Law ( email )
765 Commonwealth Avenue
Boston, MA 02215
United States
Research on Innovation ( email )
202 High Head Rd.
Harpswell, ME 04079
United States
617-531-2092 (Phone)
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