Markets For Partially Contractible Knowledge: Bootstrapping Versus Bundling

We discuss how a seller can appropriate rents when selling knowledge that lacks legal property rights by solving either an expropriation or a valuation problem and then analyze how seller rents increase when a portion of the intellectual property (IP) can be protected. The analysis shows that a sequential strategy in which the protected portion of the IP is sold prior to selling the unprotected IP is superior to selling both portions of the IP as a bundle. (JEL: D23, L14, O31) Copyright (c) 2005 The European Economic Association.