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Patents and the Success of Venture‐Capital Backed Startups: UsingExaminer Assignment to Estimate Causal Effects
Author(s) -
Gaulé Patrick
Publication year - 2018
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12168
Subject(s) - venture capital , sample (material) , business , capital (architecture) , industrial organization , entrepreneurship , economics , actuarial science , finance , chemistry , archaeology , chromatography , history
I study whether patent protection has a causal effect on entrepreneurial firm outcomes using a measure of patent examiner leniency as an instrument for getting patents. The analysis is based on sample of 1,950 U.S. startups applying for patent protection in the two years following their first round of venture capital funding. I find a positive and large effect of patents on firm success but only for life science firms and more important inventions. I interpret these results as reflecting the importance of patents in appropriating returns to invention in the life science industry.