Science and the Market for Technology

Journal Article (Journal Article)

Well-functioning markets for technology (MFT) allow inventors to sell their inventions to others that may derive more value from them. We argue that the growing use of science in inventions enhances MFT. Science-based inventions have higher gains from trade and lower transaction costs. This relationship is amplified in equilibrium because science-based inventions are also likely to feature smaller inventors with a greater propensity to trade. Using large-scale data, we show that patents citing science are more likely to be traded, especially for novel patents and for smaller inventors. We conclude that the growing use of science in invention is beneficial by encouraging the expansion of MFT and supporting a division of innovative labor.

Full Text

Duke Authors

Cited Authors

  • Arora, A; Belenzon, S; Suh, J

Published Date

  • October 1, 2022

Published In

Volume / Issue

  • 68 / 10

Start / End Page

  • 7176 - 7201

Electronic International Standard Serial Number (EISSN)

  • 1526-5501

International Standard Serial Number (ISSN)

  • 0025-1909

Digital Object Identifier (DOI)

  • 10.1287/mnsc.2021.4268

Citation Source

  • Scopus