Department of Agricultural and Resource Economics

Many recent empirical studies have examined the effect of the patent system on R&D, innovation and patenting behavior. However, few micro-level empirical papers have addressed the impact of the patent system on industry structure. In this paper we build on our previous work to investigate merger activity of firms in light of their patent holdings. We use agricultural biotechnology as an example. Three innovations are introduced: firm-level patent data is investigated as a predictor of merger activity; second, we develop a measure of patent enforceability based on patent litigation data; third, we combine both duration models and logic models in order to investigate both the timing of mergers and the matching of merger partners. The empirical results demonstrate that patent statistics are a useful predictor of merger activity; mergers in agricultural biotechnology appear to be partially motivated by difficulties in enforcing patent rights when firms have overlapping technologies; and some of the merger activity may be explained by attempts to reduce spillovers.