Working Paper No. 1186

Verifying High Quality: Entry for Sale

Published: October 30, 2017Pages: 46Keywords: Acquisitions; Innovation; Start-ups; Ownership; Patents; Verification; QualityJEL-codes: G24; L10; L20; M13, O30

Verifying High Quality: Entry for Sale Pehr-Johan Norbäck, Lars Persson and Roger Svensson


When and how do entrepreneurs sell their inventions? To address this issue, we develop an endogenous entry-sale asymmetric information oligopoly model. We show that lowquality inventions are sold directly or used for own entry. Inventors who sell post-entry use entry to credibly reveal information on quality. Incumbents are then willing to pay high prices for high-quality inventions to preempt rivals from obtaining them. Using Swedish data on patents granted to small firms and individuals, we find evidence that high-quality inventions are sold under preemptive bidding competition, post entry.

Pehr-Johan Norbäck

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Ph: +46 8 665 4522
Mob: +46 73 574 3379
pehr-johan.norback@if...

Lars Persson

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Ph: +46 8 665 4504
lars.persson@ifn.se

Roger Svensson

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Ph: +46 8 665 4549
Mob: +46 70 491 0166
roger.svensson@ifn.se

Interdisciplinary European Studies

Trust in the European Union in Challenging Times

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This is the first book in the Interdisciplinary European Studies collection. This volume provides an interdisciplinary perspective on trust in the EU from the vantage point of political science, law and economics. Lars Oxelheim, Lund University and affiliated to IFN, is one of the authors.

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