A study of Patent Thickets (1.31Mb) - UK Intellectual Property Office

A Study of Patent Thickets 55
10 per cent in pharmaceuticals and R&D services to less than 0.1 per cent in construction, oil
and gas services, real estate, law, and accounting.
Our estimates of the model for entry into patenting are shown in Table 4.3 below. The first
column is for estimates that have not been corrected for the fact that we sampled non-patenting
firms rather than including the entire population, and the next two columns are weighted
estimates that do adjust for the sampling strategy. Correcting for sampling made little difference
to the coefficients of interest, although it reduces the firm size coefficient quite a bit, because
non-patenters tend to be smaller firms. 35 The coefficient estimates shown are elasticities of the
probability that a firm will enter into patenting in a particular technology in response to a change
in the variable.
Accelerated failure time - Log Logistic
Variable Unweighted Weighted by sampling probability
Log (triples density in class) -0.121*** -0.123*** -0.128***
(0.007) (0.007) (0.008)
Log (patents in class) 0.678*** 0.696*** 0.738***
(0.020) (0.020) (0.022)
Log assets 0.156*** 0.048*** 0.052***
(0.006) (0.006) (0.006)
Log (triples density) 0.004**
* Log assets (0.002)
Log (patents) -0.032***
* Log assets (0.007)
Industry dummies stratified# stratified# stratified#
Year dummies yes yes yes
Log likelihood -59,813.9 -51,369.1 -51,357.8
Degrees of freedom 35 35 37
Chi-squared 2178.2 1982.1 1992.5
Coefficients for the hazard of entry into a patenting class are shown.
Standard errors are clustered on firm. *** (**) denote significance at the 1% (5%) level.
998,219 firm-TF34 observations with 12,991 entries (29,435 firms)
Time period is 2002-2009. Sample is all UK firms with nonmissing assets
# Estimates are stratified by industry - each industry has its own baseline hazard. [
Focusing on our variables of interest and on the weighted estimates, we see that aggregate
patenting in a technology class is a strong predictor of whether a firm enters that class. A
doubling of patenting is associated with a 70 per cent higher probability of entry (standard error
2.0%). However, when we include the triples density in the class, we find that it depresses entry.
Doubling the intensity of triples in a class is associated with a highly significant 12 per cent lower
hazard of entry into that class (standard error 0.7%).
35 The sampling weights effectively downweight the non-patenters, so the fact that they are smaller has less impact
on the prediction.