This paper analyses the effect of strategic patenting on firm and competitor performance, productivity, innovative output and market concentration. Using a novel definition of strategic patenting, this paper finds a positive effect of strategic patenting on market concentration. The results for the patentee show a positive effect of profit growth, and positive but significantly smaller contribution of strategic patenting to total factor productivity compared to novel technological patents. In contrast, peers suffer from a decrease in total factor productivity, innovative output and both profit and sales growth following strategic patenting by the focal firm. These findings suggest a conflict between patent policies designed to promote innovation while still providing incentives for the firms to capture market share and defend monopolistic positions.
Contact Person: David Heller