Full Text

Markets for Partially-Contractible Knowledge: Bootstrapping vs Bundling

James J. Anton and Dennis A. Yao

Journal of the European Economic Association 3(2-3):745-754, April-May 2005

Abstract: We discuss how a seller can appropriate rents when selling knowledge that lacks legal property rights by solving either an expropriation or a valuation problem and then analyze how seller rents increase when a portion of the intellectual property (IP) can be protected. The analysis shows that a sequential strategy in which the protected portion of the IP is sold prior to selling the unprotected IP is superior to selling both portions of the IP as a bundle. (JEL: D23, L14, O31)