Defensive Disclosure under Antitrust Enforcement

We formulate a simple model of optimal defensive disclosure by a monopolist facinguncertain antitrust enforcement and test its implications using unique data on defensivedisclosures and patents by IBM during 1955-1989. Our results indicate that strongerantitrust enforcement leads to more defensive disclosure, that quality inventions aredisclosed defensively, and that defensive disclosure served as an alternative but lesssuccessful mechanism to patenting at IBM in appropriating returns from R&D.