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Innovation and Appropriability: Revisiting the Role of Intellectual Property

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March 2022

Written by: Timothy Simcoe, Filippo Mezzanotti

Working Paper Number:

CES-22-09

Abstract

It is more than 25 years since the authors of the Yale and Carnegie surveys studied how firms seek to protect the rents from innovation. In this paper, we revisit that question using a nationally representative sample of firms over the period 2008-2015, with the goal of updating and extending a set of stylized facts that has been influential for our understanding of the economics of innovation. There are five main findings. First, while patenting firms are relatively uncommon in the economy, they account for an overwhelming share of R&D spending. Second, utility patents are considered less important than other forms of IP protection, like trade secrets, trademarks, and copyrights. Third, industry differences explain a great deal of the level of firms' engagement with IP, with high-tech firms on average being more active on all forms of IP. Fourth, we do not find any significant difference in the use of IP strategies across firms at different points of their life cycle. Lastly, unlike age, firms of different size appear to manage IP significantly differently. On average, larger firms tend to engage much more extensively in the protection of IP, and this pattern cannot be easily explained by differences in the type of R&D or innovation produced by a firm. We also discuss the implications of these findings for innovation research and policy.

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investment, economist, industrial, company, technology, entrepreneurship, innovation, inventory, patent, innovate, economically, profit, patenting, trademark, developed, innovative, firms patents, patented, patents firms, firm innovation

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Standard Statistical Establishment List, National Science Foundation, Longitudinal Business Database, Survey of Industrial Research and Development, National Research Council, North American Industry Classification System, Disclosure Review Board, Business R&D and Innovation Survey, Business Research and Development and Innovation Survey, Federal Statistical Research Data Center, National Center for Science and Engineering Statistics

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