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Patents, real options and firm performance

Bloom, Nick and Van Reenen, John ORCID: 0000-0001-9153-2907 (2002) Patents, real options and firm performance. The Economic Journal, 112 (478). C97-C116. ISSN 0013-0133

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Identification Number: 10.1111/1468-0297.00022

Abstract

Analysing the new IFS-Leverhulme database on over 200 major British firms since 1968 we show that patents have an economically and statistically significant impact on firm-level productivity and market value. While patenting feeds into market values immediately it appears to have a slower effect on productivity. This generates valuable real options because patents provide exclusive rights to develop new innovations, enabling firms to delay investments. Higher market uncertainty, which increases the value of real options, reduces the impact of new patents on productivity. If the government's policy to reduce uncertainty is successful then this should increase the productivity of Britain's knowledge capital.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/%28...
Additional Information: © 2002 Royal Economic Society
Divisions: Economics
Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
JEL classification: D - Microeconomics > D2 - Production and Organizations > D20 - General
Date Deposited: 27 Apr 2007
Last Modified: 02 Mar 2024 21:30
URI: http://eprints.lse.ac.uk/id/eprint/1451

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