Author(s)
Alan C. Marco and Gordon C. Rausser
Source
American Journal of Agricultural Economics, Vol. 90, 2008
Summary
This paper looks at how patents affect firm’s interest in merging with other firms.
Policy Relevance
The strength of a firm's patents can motivate it to seek a merger with other firms.
Main Points
- Data from biotechnology firms shows that the duration of patents and how easily they may be enforced influences firms' interest in merging with other firms.
- One firm is more likely to buy another when they have overlapping technologies.
- The firms might try to avoid enforcing patents that block the development of each other’s technology.
- Firms with more easily enforceable patents tend to consolidate.
- When many patents are involved in a single product and the patents are complex and unclear, making licensing difficult, mergers often resolve these obstacles.
