I apply a survival model to a detailed data set of Swedish patents to estimate how different financing factors affect the likelihood of patent renewal. Since the owners know more about the patents than potential external financiers, there is a problem of asymmetric information. To overcome this, Sweden has for a long time relied on government support rather than Private Venture Capital (PVC). In the empirical analysis, two kinds of government loans are unbundled. The empirical results show that patents which have received soft government loans in the R&D-phase have a higher probability of expiring than patents without such financing. But patents that have received more market-oriented government loans during the commercialization phase are renewed for as long as other commercialized patents. This finding suggests that rather than bad choices of projects, it is the nature of the contract terms that explains the low renewal of some patents with government financing.
Publicly–Funded R&D Programs and Survival of Patents
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