Explaining Observed Licensing Agreements: Toward a Broader Understanding of Technology Flows

A lack of quantitative information on cross-firm licensing agreements constrains policy makers in their overall understanding of the innovation process and the innovative environment of firms. This paper develops a methodology for understanding the patterns of technology flows that result through licensing agreements from readily available patent data. In addition, hypotheses about firms that share technology through licensing are tested; in particular, we find that diversified firms have a higher probability of licensing their technology.