Acquisition for Sleep

35 Pages Posted: 17 Dec 2019

See all articles by Lars Persson

Lars Persson

Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Pehr-Johan Norbäck

Research Institute of Industrial Economics (IFN)

Charlotta Olofsson

Lund University

Multiple version iconThere are 2 versions of this paper

Date Written: December 2019

Abstract

Within the policy debate, there is a fear that large incumbent firms buy small firms' inventions to ensure that they are not used in the market. We show that such "acquisitions for sleep" can occur if and only if the quality of a process invention is small; otherwise, the entry profit will be higher than the entry-deterring value. We then show that the incentive for acquiring for the purpose of putting a patent to sleep decreases when the intellectual property law is stricter because the profit for the entrant then increases more than the entry-deterring value does.

Keywords: Acquisitions, Innovation, IP law, ownership, Sleeping patents

JEL Classification: G24, L1, L2, M13, O3

Suggested Citation

Persson, Lars and Norbäck, Pehr-Johan and Olofsson, Charlotta, Acquisition for Sleep (December 2019). CEPR Discussion Paper No. DP14172, Available at SSRN: https://ssrn.com/abstract=3504601

Lars Persson

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Pehr-Johan Norbäck (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Charlotta Olofsson

Lund University ( email )

Box 117
Lund, SC Skane S221 00
Sweden

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