IP-for-IP or Cash-for-IP? R&D Competition and the Market for Technology

IP-for-IP or Cash-for-IP? R&D Competition and the Market for Technology We analyze how firms might benefit from trading restrictions in the market for technology. We show that restricting trade to reciprocal exchange (“IP-for-IP” barter instead of cash transactions), as in cross-licensing agreements, alters the allocation of R&D resources and reduces overinvestment in R&D. The tighter are the trading restrictions, the higher are the costs that are due to forgone gains from trade. Our analysis of the trade-offs involved shows that firms benefit from IP-for-IP restrictions, compared to both free trade and no trade environments, in industries where: (1) firms differ in their capabilities to commercialize IP; and (2) patent complementarities exist. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

IP-for-IP or Cash-for-IP? R&D Competition and the Market for Technology

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Springer US
Copyright © 2016 by The Author(s)
Economics; Industrial Organization; Microeconomics
Publisher site
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