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Do Patent Pools Encourage Innovation? Evidence from the Nineteenth-Century Sewing Machine Industry

Published online by Cambridge University Press:  01 December 2010

Ryan Lampe  and
Petra Moser
Ryan Lampe*
Affiliation:
Assistant Professor, Department of Economics, DePaul University, 1 East Jackson Blvd., Suite 6200, Chicago, IL 60604-2287. E-mail: [email protected].
Petra Moser*
Affiliation:
Assistant Professor, Department of Economics, Stanford University, Stanford, CA 94305; and NBER. E-mail: [email protected].
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Abstract

Members of a patent pool agree to use a set of patents as if they were jointly owned by all members and license them as a package to other firms. This article uses the example of the first patent pool in U.S. history, the Sewing Machine Combination (1856–1877) to perform the first empirical test of the effects of a patent pool on innovation. Contrary to theoretical predictions, the sewing machine pool appears to have discouraged patenting and innovation, in particular for the members of the pool. Data on stitches per minute, an objectively quantifiable measure of innovation, confirm these findings.

Type
ARTICLES
Information
The Journal of Economic History , Volume 70 , Issue 4 , December 2010 , pp. 898 - 920
Copyright
Copyright © The Economic History Association 2010

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