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ATTRACTING SKEPTICAL BUYERS: NEGOTIATING FOR INTELLECTUAL PROPERTY RIGHTS *
Author(s) -
Anton James J.,
Yao Dennis A.
Publication year - 2008
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2008.00481.x
Subject(s) - confidentiality , intellectual property , waiver , business , negotiation , skepticism , competition (biology) , law and economics , expropriation , property rights , internet privacy , economics , law , microeconomics , political science , market economy , philosophy , epistemology , ecology , computer science , biology
Expropriable disclosures of knowledge to prospective buyers may be necessary to facilitate the sale of intellectual property (IP). In principle, confidentiality agreements can protect disclosures by granting the seller rights to sue for unauthorized use. In practice, sellers often waive confidentiality rights. We provide an incomplete information explanation for the waiver of confidentiality rights that are valuable in complete information settings. Waiving sacrifices the protective value of confidentiality to gain greater buyer participation. Buyer skepticism, which reduces participation, arises endogenously from three elements: asymmetric information regarding seller IP, rent dissipation from competition for IP, and ex post costs from expropriation lawsuits.