Effects of knowledge spillovers between competitors on patent quality: what patent citations reveal about a global duopoly

Abstract

This paper analyses the effects on patent quality of a type of spillovers arising from the disclosure of patent information by firms engaged in competition in a global duopoly. Both firms are involved in producing new technologies and they do not cooperate on joint patents. In this context, we explored whether the disclosure of crucial knowledge in the patents of one of the firms affects the patent quality of its respective competitor. The empirical methodology relies on forward citations as an indicator of quality, and backward citations to the competitor as a measure of spillovers. We estimated several count models with a sample of 7750 patent families (divided into subsamples) owned by two large companies, Airbus and Boeing. Our econometric findings show that, for technologies in which the two firms account for the majority of the global patents, neither of the firms in the duopoly was able to harness spillovers from the rival to improve the quality of its patents. However, knowledge from the competitor becomes relevant, at least for one of the focal firms, in explaining patent quality of other technologies in which the two firms do not exert a dominant position.