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Patents as credence goods

Oxford Journal of Legal Studies, ISSN: 0143-6503, Vol: 27, Issue: 4, Page: 707-740
2007
  • 22
    Citations
  • 490
    Usage
  • 21
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    22
    • Citation Indexes
      22
  • Usage
    490
    • Abstract Views
      490
  • Captures
    21

Article Description

The view of patents as well-defined property rights is as simplistic as it is ubiquitous. This article argues that in newly arising or immature technologies, patents are subject to intrinsic and extrinsic uncertainty that make them very opaque representations of the underlying inventions. The opacity is a result of unsettled legal doctrine and scientific terminology, uncertain commercial and technological prognosis, and leads to considerable ambiguity in property parameters. Patents in immature technologies do not solve Arrow's information paradox of non-rivalrous goods because they do not represent the sharp exclusive right that is central to his thesis. In such cases patents ought to be reclassified in terms of their perceived and actual function as credence goods. The difficulty in discovering the value of these patents necessitates credence verifiers, further increasing the transaction costs of encouraging innovation. The theoretical and empirical implications of credence explored in this article are based primarily on the Anglo-American legal protection of biotechnological inventions, but may be equally relevant to patents in general and patents in other newly arising technologies, in particular. © The Author 2007. Published by Oxford University Press. All rights reserved.

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