Bargaining in Technology Markets: An empirical study of biotechnology alliances

We empirically examine the distribution of bargaining power between buyers and sellers on the biotechnology markets by estimating the extracted surplus in alliance agreements, which depends on each party's bargaining power. The results show that buyers have extracted more surplus than sellers. However, these also reveal that the surplus extracted by buyers has been decreasing while that of the sellers has been increasing. We construe that the prices of biotechnologies have been lower than their market value because of the strong bargaining position of buyers, but that sellers' negotiating power may been improving.