Dr. Paul H. Jensen (University of Melbourne)

Program

• Date: 21.10.2009
  Time: 17:15 - 18:45
  Location: Room 202, Kaulbachstr. 45 / 2.OG

Estimating the Patent Premium: Evidence from the Australian Inventor Survey 

Patents are intended to attenuate under-investment in invention by granting innovators a monopoly right over their technology for a finite period. However, empirical evidence suggests that the incremental private return facilitated by a patent (the "patent premium") may only be positive in a few industries (see Arora et al. 2008). This paper proposes a novel approach to estimating the patent premium using data on 1,803 patent applications collated from a comprehensive survey of Australian inventors. In the survey, inventors were asked to estimate the monetary value generated by their inventions. Since most inventions are not traded in an open market, inventor surveys have become an increasingly popular way of understanding the distribution of invention values (see Harhoff et al. 1999; Gambardella et al. 2008). The major difference between our study and other inventor surveys is that we survey patent applicants rather than patentees. Since some patent applications were unsuccessful, we have information about the value of both patented and unpatented inventions. Moreover, there is considerable variation in the commercialization outcomes across patented and unpatented inventions. This is the key to our empirical identification of the patent premium.
The main finding is that inventions which are protected by a patent are 48 per cent more valuable than inventions without a patent, ceteris paribus. This result is robust to different definitions of `value' and different empirical specifications. Thus, we conclude that we find robust evidence of the existence of the patent premium.

A detailed version can be found here (pdf, 65kB).