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Appears in Collections:Accounting and Finance Working Papers
Title: IP-for-IP or Cash-for-IP? R&D Competition and the Market for Technology
Author(s): Herbst, Patrick
Jahn, Eric
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Citation: Herbst P & Jahn E (2011) IP-for-IP or Cash-for-IP? R&D Competition and the Market for Technology. SSRN Working Paper Series. Social Science Research Network.
Keywords: Intellectual Property
R&D competition
Technology Trade
JEL Code(s): O32
Issue Date: 2-Jul-2011
Publisher: Social Science Research Network
Series/Report no.: SSRN Working Paper Series
Abstract: This paper argues that firms use 'IP-for-IP' policies such as cross-licensing to strategically restrict transactions in the market for technology. The commitment to limit trade to reciprocal exchange (barter instead of cash transactions) enables firms to alter the allocation of R&D and soften R&D competition. In particular, it induces firms to focus R&D on their area of expertise. The costs of IP-for-IP are foregone gains from trade. Our analysis of the trade-offs involved shows that IP-for-IP is profitable in industries where firms differ in their capabilities to commercialize IP. Patent complementarities and firm asymmetries further strengthen the optimality of IP-for-IP.
Type: Working or Discussion Paper
Rights: Author retains copyright
Affiliation: Accounting and Finance
Goethe University Frankfurt

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