Patent Success, Patent Holdup and the Structure of Property Rights

SFI research paper, No 15-39
with Heng Geng and Sandy Lai

Abstract

Innovation processes under patent protection generate holdup problems if complementary patents are owned by different firms (Hart, 1995). We show that shareholder ownership overlap across firms with patent complementarities helps mitigate such holdup problems and correlates significantly with higher patent investment and more patent success. The positive innovation effect is strongest for concentrated overlapping ownership and for the cases in which overlapping shareholders are dedicated investors, with long investment horizons and underdiversified portfolios.

Additional Files

A previous verion of the paper was circulated under the title Technological Progress and Ownership Structure with it Web Appendix.

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