'Successes' and 'Failures' in the Markets for Technology

Abstract

Market-mediated contracts for technology trade are bound by several transaction costs. This paper argues that as these transaction costs become less severe, markets for technology can help improve three market failures: (i) R&D duplications; (ii) externalities in potentially public R&D outcomes; and (iii) deviations from marginal cost pricing in the downstream product markets. In addition, with larger markets of potential users, the technology suppliers will have incentives to produce more 'general' technologi…