Paper is co-authored with the fantastic @colleencunningham.bsky.social !

We do find evidence of changing well designs.

Trade secrets are ubiquitous, but are hard to study. This is, to our knowledge, is the first large-sample project-level evidence on the drivers of their use and novelty. More work is needed to understand this form of IP.
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We find no evidence of substitution with patenting (little patenting in hydraulic fracturing as a baseline) or concealing of toxic behavior (nearly all wells have multiple disclosed toxic ingredients, patterns do not change post-DTSA, and there's no increase in lawsuits).

and what kind of economic activity it may enable.

We also find that, on average, wells using trade secret ingredients exhibit higher productivity, though the DTSA itself shows limited additional productivity gains.

others can legally reverse-engineer or discover independently and use such information without constraints. This is why examining whether legal protections change trade secret use is important, because it informs our understanding for where protection is particularly valuable

Note that for disclosed types of IP like patents or trademarks, considerations of partner trust are attenuated: firms have a monopoly over these types of disclosed IP. Firms do not have monopoly over information covered by trade secrets:

🤝 Interestingly, trade secret legal protection appears to act as a substitute to relational trust: for instance, firms are more likely to use trade secrets in weaker inter-firm relationships in high treatment states post-policy enactment.

📈 Following the DTSA in 2016, we observe substantial increases in both the use and novelty of trade secrets in states where trade secret protection was previously lower, which we label as high treatment states.

Exploiting these conditions and a change in trade secret protection levels across US states following the passage of the Defend Trade Secrets Act (DTSA), we study the incidence and nature of trade secrets in this sector.

🔍 What do we find?

1.Since early 2010s, firms in the hydraulic fracturing sector in the US have to report all components at the project level (ingredients used in a well's fracturing mix)
2.In a subset of states, authorities require justifications when ascertaining firms’ claims of trade secrecy.

⁉️ How do we study trade secrets?

It’s tough: firms keep information secret for continued legal and competitive protection. To make some progress, we focus on a setting that has high disclosure requirements. 📖 This means firms disclose all details of a project, except for the trade secrets.

Thank you for hosting me - and I love the emojis to illustrate the talk, very much on point !
I would add one more : 🧐

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“Open innovation falls short; R&D people didn’t trust external innovation at first; the new CEO promotes the idea of an ecosystem while the previous one didn’t; we teach an ecosystems course internally”. He even cited Ron Adner !