Investing in legal advice

摘要

I study the effect of strategic product market considerations on the resource spending decision of plaintiffs in patent lawsuits. I use a unique sample of US patent litigation cases and focus on an important decision of the plaintiffs; their decision to hire external attorneys. I find that plaintiffs hire significantly more attorneys if they are in a horizontal relationship with the defendant rather than in a vertical relationship, i.e., if the litigants compete on the product market. This strategic product market effect is more pronounced the more concentrated the product market is. (C) 2018 Elsevier B.V. All rights reserved.