Date Added: Aug 2011
The "Market for innovation" - the sale and licensing of patents - is an often discussed source of incentives to invest in R&D. This paper presents and estimates a model of the transfer and renewal of patents that, under some assumptions, allows the authors to quantify the gains resulting from the transfer of patents in the market for innovation. The gains from trade measure the benefits of reallocating the ownership of a patent from the original inventor to a new owner for whom the patent has a higher value. In addition, they study the effect that lowering the costs of technology transfer has on the proportion of patents traded and the gains from trade.