DP15713 Patents on General Purpose Technologies: Evidence from the Diffusion of the Transistor

Author(s): Markus Nagler, Monika Schnitzer, Martin Watzinger
Publication Date: January 2021
Keyword(s): General Purpose Technololgies, Innovation, Intellectual Property, Standardized Licensing, Transistor
JEL(s): O3, O33, O34
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15713

How do patents influence the spread of General Purpose Technologies? To answer this question, we analyze the diffusion of the transistor, one of the most important technologies of our time. We show that the transistor diffusion and cross-technology spillovers increased dramatically after AT&T began licensing its transistor patents on standardized terms in 1952. This suggests that standardized licensing of the transistor patents helped jumpstart the positive feedback loop between innovations upstream and in applications. A subsequent reduction in royalties did not lead to a further increase, suggesting that standardized licensing in itself is more important than the specific royalty rates.