Ownership Structure of Vertical Research Collaboration: Empirical Analysis from an Incomplete Contract Perspective

Property right literature suggests that ownership of the output of a joint research is assigned so as to enhance the research productivity, given that a research contract is significantly incomplete. This paper examines this view, exploiting rich information at the project level hand collected through a large scale inventor survey in Japan. We have found that the contribution of non-contractible research effort by a vertical partner (as measured by a provision of a co-inventor) dominates the contributions of more contractible inputs (ex-ante knowledge contribution for suggesting the research project and financial contribution) in accounting for the structure of ownership, while such is not the case in research productivity. We have also found that such gap is larger for a user co-inventor than a supplier co-inventor, which may reflect stronger necessity for a user or a downstream firm to combine the patents.