The monopoly rights represented by patents have classically been viewed as a short-run sacrifice of consumer surplus for the sake of long-run increases in economic growth through the promotion of investment in R&D. In recent years, this view has increasingly been tempered by concerns about the potential for stifling effects of patent rights in the context of cumulative innovation. In principle, the ability to negotiate licensing contracts with patent holders should allow firms to use patented inventions. The fragmentation of ownership of rights – in other words the market structure of the market for technology – is an important aspect of the IP landscape that determines the ease with which firms are able to access upstream technology.

The aim of this project is to identify which firms are especially vulnerable to fragmentation of intellectual property rights taking the technological orientation and the size of the firms into account. The project uses direct survey evidence on the extent to which the innovative activity of firms has been hampered due to lack of access to necessary intellectual property rights. Higher fragmentation raises transaction costs of acquiring all necessary licenses and may therefore have negative effects on innovation. A large own patent portfolio increases the bargaining power of the firm and may ease the access to required intellectual property rights.