Wednesday, July 3, 2013
Posted by D. Daniel Sokol
Ajay Bhaskarabhatla (Erasmus University Rotterdam) and Enrico Pennings (Erasmus University Rotterdam) explore Defensive Disclosure under Antitrust Enforcement.
ABSTRACT: We formulate a simple model of optimal defensive disclosure by a monopolist facing uncertain antitrust enforcement and test its implications using unique data on defensive disclosures and patents by IBM during 1955-1989. Our results indicate that stronger antitrust enforcement leads to more defensive disclosure, that quality inventions are disclosed defensively, and that defensive disclosure served as an alternative but less successful mechanism to patenting at IBM in appropriating returns from R&D.