Licensing tacit knowledge: Intellectual property rights and the market for know-how

Journal Article (Journal Article)

Technology transfer involves more than just the permission to use knowledge covered by patents; the transfer of know-how is critical to the successful utilization of the transferred technology. However, know-how is typically difficult to codify, costly to transfer, and hence, difficult to contract upon. Using a principal-agent model I show that simple arms length contracts can accomplish the transfer know-how. The key to the success of arms length contracts is the complementarity between know-how and patents. The model explains why patents and know-how are bundled together in licensing contracts. It shows why licensing has limitations as a strategy for appropriating rents from innovation. The paper points to the key role that patent scope plays in determining the efficiency of know-how transfer and shows that broader patents can improve the efficiency of technology transfer, even when important components of the technology (know-how) are not protected by patents. © 1995, Taylor & Francis Group, LLC. All rights reserved.

Full Text

Duke Authors

Cited Authors

  • Arora, A

Published Date

  • January 1, 1995

Published In

Volume / Issue

  • 4 / 1

Start / End Page

  • 41 - 60

Electronic International Standard Serial Number (EISSN)

  • 1476-8364

International Standard Serial Number (ISSN)

  • 1043-8599

Digital Object Identifier (DOI)

  • 10.1080/10438599500000013

Citation Source

  • Scopus