Silverberg, G; Verspagen, B "The size distribution of innovations revisited: An application of extreme value statistics to citation and value measures of patent significance" J. Econometrics 139(2):318-339, August 2007

[Eugene Garfield]

E-mail Addresses: 
gerald.silverberg at merit.unimaas.nl
b.verspagen at tm.tue.nl

TITLE:          The size distribution of innovations revisited: An
                application of extreme value statistics to citation
and value measures of patent significance (Article, English)

AUTHOR:         Silverberg, G; Verspagen, B

Source: JOURNAL OF ECONOMETRICS 139 (2): 318-339 AUG 2007 

Document Type: Article 
Language: English 
Cited References: 30      Times Cited: 0        

Abstract: 
This paper focuses on the analysis of size distributions of innovations, 
which are known to be highly skewed. We use patent citations as one 
indicator of innovation significance, constructing two large datasets from 
the European and US Patent Offices at a high level of aggregation, and the 
Trajtenberg [1990, A penny for your quotes: patent citations and the value 
of innovations. Rand Journal of Economics 21(1), 172-187] dataset on CT 
scanners at a very low one. We also study self-assessed reports of patented 
innovation values using two very recent patent valuation datasets from the 
Netherlands and the UK, as well as a small dataset of patent licence 
revenues of Harvard University. Statistical methods are applied to analyse 
the properties of the empirical size distributions, where we put special 
emphasis on testing for the existence of 'heavy tails', i.e., whether or 
not the probability of very large innovations declines more slowly than 
exponentially. While overall the distributions appear to resemble a 
lognormal, we argue that the tails are indeed fat. We invoke some recent 
results from extreme value statistics and apply the Hill [1975. A simple 
general approach to inference about the tails of a distribution. The Annals 
of Statistics 3, 1163-1174] estimator with data-driven cut-offs to 
determine the tail index for the right tails of all datasets except the NL 
and UK patent valuations. On these latter datasets we use a maximum 
likelihood estimator for grouped data to estimate the tail index for 
varying definitions of the right tail. We find significantly and 
consistently lower tail estimates for the returns data than the citation 
data (around 0.6-1 vs. 3-5). The EPO and US patent citation tail indices 
are roughly constant over time, but the latter estimates are significantly 
lower than the former. The heaviness of the tails, particularly as measured 
by value indicators, we argue, has significant implications for technology 
policy and growth. theory, since the second and possibly even the first 
moments of these distributions may not exist. (c) 2006 Elsevier B.V. All 
rights reserved. 

Addresses: Silverberg G (reprint author), Maastricht Univ, MERIT, POB 616, 
NL-6200 MD Maastricht, Netherlands
Maastricht Univ, MERIT, NL-6200 MD Maastricht, Netherlands
Eindhoven Univ Technol, ECIS, NL-5600 MB Eindhoven, Netherlands

E-mail Addresses: gerald.silverberg at merit.unimaas.nl, b.verspagen at tm.tue.nl
 
Publisher: ELSEVIER SCIENCE SA, PO BOX 564, 1001 LAUSANNE, SWITZERLAND 
Subject Category: Economics; Mathematics, Interdisciplinary Applications; 
Social Sciences, Mathematical Methods 
IDS Number: 183NV 

ISSN: 0304-4076  

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