1. ¹Department of Management, Bocconi University, Milan, Italy
2. ²Inno-Tec, Ludwig-Maximilians-Universität (LMU), München, and CEPR, London
3. ³Department of Economics & UNU-MERIT, Maastricht University, Maastricht, The Netherlands

Correspondence: Alfonso Gambardella, Bocconi University, Milan, Italy. E-mail: alfonso.gambardella@unibocconi.it

Abstract

This paper employs data from an extensive European survey to produce one of the first systematic assessments of the private economic value of patents. The estimated mean of our patent value distribution is higher than 3 million euros, the median is about one-tenth of it, and the mode is around a few thousand euros. This is in line with previous findings about the skewed distribution of patent values. Our measure is significantly correlated with the number of patent citations, references, claims, and countries in which the patent is applied. Citations explain value as much as the other three indicators combined, and the right tail of citations is correlated with the right tail of our value measure. Yet, the four indicators only explain 2.7% of the variance of patent value. Thus, while the use of these indicators as proxies for value, particularly citations, may be justified, predictions based on these indicators carry significant noise. After using country, technology, and patent class fixed effects, we only explain 11.3% of the variation in patent value. The 'measure of our ignorance' about the determinants of patent value is then still sizable, which calls for additional research to fill the gap.