Carlos J. Serrano

Trading and Enforcing Patent Rights

We study how the market for innovation affects enforcement of patent rights. Conventional wisdom associates the gains from trade with comparative advantage in manufacturing or marketing. We show that these gains imply that patent transactions should increase litigation risk. We identify a new source of gains from trade, comparative advantage in patent enforcement, and show that transactions driven by this motive should reduce litigation. Using data on trade and litigation of individually-owned patents in the U.S., we exploit variation in capital gains tax rates as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly affect patent transactions, and that reallocation of patent rights reduces litigation risk, on average. The impact of trade on litigation is heterogeneous, however. Patents with larger potential gains from trade are more likely to change ownership, suggesting that the market for innovation is efficient. We also show that the impact of trade on litigation depends on characteristics of the transactions.

Currency Substitution in Latin America: Lessons from the 1990s

The authors study how agents in Latin America allocate their balances between dollar-denominated and domestic currency-denominated accounts. They empirically determine the causes of currency substitution, its significance in recent banking crises, and the link between currency substitution, and volatility in macroeconomic aggregates. Their findings: The ratio of dollar deposits to broad money is strongly influenced by expectations of depreciation. They show that depositors in Latin America face some uncertainty and frictions when making their portfolio decisions. They explore the macroeconomic consequences of a dollarized economy. In particular, they find that, in the presence of currency substitution, past banking crises are good predictors of future crises. In other words, having a highly dollarized economy, increases the response of the banking system when there is a bad shock, which halts the outflow of capital. Once an economy is in crisis, however, having more dollar-denominated deposits in the banking system, increases the probability of a longer crisis in the future, because it increases exchange rate exposure in an already weak banking system. Finally, they show that the volatility of macroeconomic variables linked to the financial system, increases whenever the economy becomes more dollarized, which in turn makes the choice of monetary targets more difficult.

Patent Trading Flows of Small and Large Firms

This article presents the results of an analysis of the patent trading flows of small and large firms and the determinants of these firms patent sale and acquisition decisions. We also examine whether these transactions lead to an excessive concentration of patent rights. We show that small firms disproportionately sell and acquire more patents than large firms, and find no evidence that patent trading brings about a significant concentration of patent rights in the hands of large firms. We find that the match between new patented innovations and the original inventors patent portfolio plays an important role in how successful firms are at generating value from their patents, and in the decision to sell a patent. And among the traded patents, we show that patent acquisitions respond to complementarities between the acquired patented innovation and the buyers technological capabilities to adopt it. Our empirical analysis uses a new, comprehensive data set that matches information on patent trades and the identity of patent owners over a patents lifetime.

ESTIMATING THE GAINS FROM TRADE IN THE MARKET FOR PATENT RIGHTS: GAINS FROM TRADE IN THE MARKET FOR PATENTS

The “market for patents”—the sale of patents—is an often discussed source of incentives to invest in R&D. This article presents and estimates a model of the transfer and renewal of patents that, under some assumptions, allows me to quantify the gains resulting from the transfer of patents. The gains from trade measure the private benefits of reallocating the ownership of a patent from the original patentee to a new owner for whom the patent has a higher value. In addition, I study the effect that lowering transaction costs has on the proportion of patents traded and the gains from trade.

Intangible but bankable

Young science and technology companies are often rich in intangibles but lack physical assets and cash flows required to secure a loan. Intangibles, such as patents, are effectively “unbankable” for traditional lenders because of international banking regulations. Intangibles also are often

Dollar Denominated Accounts in Latin America During the 1990s

In this paper we analyze the evolution of dollar-denominated accounts in Latin America, and how they impact the stability of the banking system and the volatility of macroeconomic aggregates. Our findings reveal that dollar deposits are strongly influenced by depreciation expectations of the local currency even in an environment of fairly low inflation. We also find that having more dollar accounts increases the probability of future crises if the economy is already in a crisis. Finally, our findings suggest that for some macroeconomic aggregates there exists a positive correlation, in the long and short run, between their volatility and the volume of dollar-denominated accounts in the banking system.