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‰‰@‘่@F@Using Patents for Promotion

                            ƒ abstract „

 A traditional view of patents and patenting shows a trade-o between the benefit of appropria- tion and the cost of information revelation. However, firms may benefit from information revelation to consumers because patents can provide credible information about the firmfs ability to develop new technologies and produce good quality products.
In fact, we frequently observe that many firms use their patents for promotion in a variety of industries, including foods, cosmetics, and electric devices. This paper focuses on the potential value of an informational function of patents, and investigates in what situation a firm benefits from using a patent for promotion. In addition, we discuss a relationship between patents and trademarks from the viewpoint of information rev- elation. We make two major findings. First, if consumers believe that a firmfs ability is low but the firmfs ability is actually high, then the value of the patent for promotion goes up as consumersf belief strengthens. In other words, the informational function of a patent becomes valuable with the high likelihood of the high ability firm, if the firm has little reputation created from a trade- mark. On the other hand, if consumers believe that a firmfs ability is high and the firmfs ability is actually high, then the value of the promotional patent shrinks as consumersf belief strengthens. In other words, the informational function of a patent becomes redundant with the high likelihood of a high-ability firm, if the firm has already an excellent reputation. Second, a low-ability firm incurs a loss because the firm is more likely to fail in R&D, and this loss expands as consumersf belief strengthens.