DO PATENT POOLS ENCOURAGE INNOVATION? EVIDENCE ...

creation of a pool for each pool patent. Results are robust to the inclusion of
linear and quadratic time trends, controls for the age of the pool, binary
specifications of the pool variable, and Poisson regressions to control for the
count data nature of patents.
A potential concern with the difference-in-differences estimate is that the
creation of a pool may be an endogenous response to variation in rates of
innovation across technologies and over time. Technologies that are more
innovative may be more likely to be included in a pool (Shapiro, 2001; Dequiedt
and Versaevel, 2007). Thus pool subclasses produce nearly 3 times as many
patents before the creation of a pool compared with other subclasses in the same
main class, so that baseline estimates may underestimate the real decline in
patenting after the creation of a pool.
Pools may also be formed in response to a decline in innovation, after a
technology has matured. To investigate this, we estimate annual coefficients
before and after the creation of a pool. Annual coefficients become negative and
statistically significant six years after the creation of the pool, suggesting that the
creation of a pool affected rates of invention, rather than the other way around. In
fact, annual coefficients imply that the effects of a pool intensified over time. For
example subclasses with an additional pool patent produced 13 percent in the first
five years after a pool had formed, and 19 percent in years six to ten.
A series of robustness checks confirm the main results. Estimates are
robust to restricting the estimation to subclasses that include pool patents, Poisson
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