Journal Article

The Sale of Ideas: Strategic Disclosure, Property Rights, and Contracting

James J. Anton and Dennis A. Yao

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 69, issue 3, pages 513-531
Published in print July 2002 | ISSN: 0034-6527
Published online July 2002 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/1467-937X.t01-1-00020
The Sale of Ideas: Strategic Disclosure, Property Rights, and Contracting

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  • Information, Knowledge, and Uncertainy
  • Technological Change; Research and Development
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Ideas are difficult to sell when buyers cannot assess an idea's value before it is revealed and sellers cannot protect a revealed idea. These problems exist in a variety of intellectual property sales ranging from pure ideas to poorly protected inventions and reflect the nonverifiability of key elements of an intellectual property sale. An expropriable partial disclosure can be used as a signal, allowing the seller to obtain payment based on the value of the remaining (undisclosed) know-how. We examine contracting after the disclosure and find that seller wealth is pivotal in supporting a partial disclosure equilibrium and in determining the payoff size.

Keywords: D83; L14; O34

Journal Article.  0 words. 

Subjects: Information, Knowledge, and Uncertainy ; Technological Change; Research and Development ; Market Structure, Firm Strategy, and Market Performance

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