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This paper investigates the effects of outsourcing of prior art search on the efficiency of patent examination, using a large scale Japanese patent examination data. Outsourcing may increase examination quality by expanding the scope of prior art search, while it may have a negative effect if the synergy between search and examination is important. Controlling for the endogeneity of outsourcing decision as well as the changes in the time resources available for an examiner, we find that the outsourcing of prior art search significantly decreases the frequency of appeals against both examiners’ rejections and grant decisions and reduces the length of examination duration. At the same time we find that the prior art search of complex inventions is not outsourced. These results suggest that the opportunity for exploiting external knowledge and capability can increase the quality as well as the speed of examination
