DO PATENT POOLS ENCOURAGE INNOVATION? EVIDENCE ...

D. Controlling for the age of the pool and investigating pre-pool effects
Estimates that control for the age of the pool suggest that the decline in
patenting intensifies over time. In the first five years after a pool forms,
subclasses that include an additional pool patent produce 0.33 fewer patents per
year; between years 6 and 10, subclasses with an additional pool patent produce
0.49 fewer patents, and between years 11 and 18, they produce 0.55 fewer patents
(significant at 1 percent, Table 4, column 4).
Alternative specifications estimate coefficients separately for each year,
allowing coefficients for the pool period to be different from zero before the
creation of a pool.
(2) Patents ct = + k * Pool Patents c + t + f c + ct
where k =-17,-16….17, 18, counts years before and after a pool forms. This
approach makes it possible to investigate differential changes in patenting that
precede the creation of the pool. For example, it addresses the issue that the year
when a pool was created may be endogenous if firms decide to form a pool once
the technology is mature and invention has begun to decline.
Annual coefficient become negative and statistically significant six years
after the creation of a pool, suggesting that patenting declined in response to the
pool, rather than the reverse. In the ten-year period leading up to the pool, annual
coefficients are not statistically significantly different from zero. Estimates of
annual coefficients also confirm that the intensity of the decline increases over
time, reaching 0.39 fewer patents 10 years after the creation of a pool (Figure 5).
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