Contracting for tacit knowledge: The provision of technical services in technology licensing contracts

Journal Article (Journal Article)

Recent research on the economic payoff from new technology has emphasized the importance of tacit knowledge or know-how. This paper shows that arm's length contract can overcome the problems in contracting for know-how by bundling complementary inputs with know-how in a technology package, and leveraging the superior enforceability of contracts over the latter. In the empirical part of this paper, the relationship between bundling and transfer of know-how is analyzed, using Indian data. The results imply that tied sales of inputs may increase the efficiency of contracts involving the transfer of know-how. A striking result, in the context of the current North-South debates on intellectual property rights, is the packaging of patents with know-how.

Full Text

Duke Authors

Cited Authors

  • Arora, A

Published Date

  • August 1, 1996

Published In

Volume / Issue

  • 50 / 2

Start / End Page

  • 233 - 256

International Standard Serial Number (ISSN)

  • 0304-3878

Digital Object Identifier (DOI)

  • 10.1016/S0304-3878(96)00399-9

Citation Source

  • Scopus