nep-ino New Economics Papers
on Innovation
Issue of 2006‒10‒07
seventeen papers chosen by
Koen Frenken
Universiteit Utrecht

  1. Reinforcing the patent system? Patent fencing, knowledge diffusion and welfare By Murat YILDIZOGLU (E3i-IFReDE-GRES)
  2. Disclosing vs. Withholding Technology Knowledge in a Duopoly By Emanuele Bacchiega; Paolo Garella
  3. Innovation and Intellectual Property Rights By Sunil Kanwar
  4. Research Joint Ventures, Optimal Licensing, and R&D Subsidy Policy By Cuihong Fan; Elmar Wolfstetter
  5. Sustainability and Cities as Systems of Innovation By Björn Johnson; Martin Lehmann
  6. What do you mean by "mobile"? Multi-applicant inventors in the European Bio-Technology Industry By Francesco Laforgia; Francesco Lissoni
  7. R&D IN THE PHARMACEUTICAL INDUSTRY: A WORLD OF SMALL INNOVATION By Beatriz Dominguez; Juan-José Ganuza; Gerard Llobet
  8. Institutions and ICT Adoption By Kiessling, Johan
  9. S&T activities and firm performance - microeconomic evidence from manufacturing in Shanghai By Zhu, Pingfang; Li, Lei; Lundin, Nannan
  10. L'articulation science/innovation en France : dix ans d'action publique pour le développement de la génomique et des biotechnologies By Anne Branciard
  11. Business Process Innovation using the Process Innovation Laboratory. By Møller, Charles
  12. When Does a Developing Country Use New Technologies? By Cuong Le Van; Olivier Bruno; Bruno Masquin
  13. "Innocuous" Minimum Quality Standards By Paolo Garella
  14. Selection and Comparative Advantage in Technology Adoption By Tavneet Suri
  15. On R&D Information Sharing and Merger By Uday Bhanu Sinha
  16. Clean development mechanism (CDM) vs. international permit trading – the impact on technological change By Hagem, Cathrine
  17. How Reasonable is the ‘Reasonable’ Royalty Rate? Damage Rules and Probabilistic Intellectual Property Rights By Jay Pil Choi

    Abstract: This article develops an evolutionary model of industry dynamics in order to carry out a richer theoretical analysis of the consequences of a stronger patent system. This model explicitly takes into account the potentially positive effects of the patents: Publication of patents participates to the building of a collective knowledge stock on which the innovations can rely, and dropped patents can provide a source of technological progress for firms that are lagging behind the leaders of the industry. These dimensions of the patent system are used to question the negative results of Vallée & Yildizoglu (2006). The main results of the new model show that these positive effects do not counterbalance the negative effects of a stronger patent system on social welfare and global technological progress, even if it is a source of better protection and higher profits for the firms.
    Keywords: Innovation, Technical progress, Patent system, Intellectual property rights (IPR), Technology policy, Technological regimes
    JEL: O3 O34 L52
    Date: 2006
  2. By: Emanuele Bacchiega; Paolo Garella (Dipartimento di Scienze Economiche, University of Bologna, Italy)
    Keywords: Oligopoly, Information disclosure, R&D Joint Ventures, R&D Consortia, Returns to scale
    JEL: L13 O30
    Date: 2006–05–02
  3. By: Sunil Kanwar (Delhi School of Economics)
    Abstract: Very little empirical evidence exists on the relationship between intellectual property rights and innovation. Existing studies tend to be indirect and do not consider the influence of IPRs on innovation per se; nor do they adequately allow for the endogeneity of IPRs. Correcting for these omissions, we show that the strength of intellectual property protection has a strong positive influence on innovation.
    Keywords: Innovation, IPRs, Endogeneity.
    JEL: O O
    Date: 2006–08
  4. By: Cuihong Fan (Shanghai University of Finance and Economics, School of Economics, Guoding Road 777 200433 Shanghai, China.; Elmar Wolfstetter (Dept. of Economics, Institute of Economic Theory I, Humboldt University at Berlin, Spandauer Str. 1, 10099 Berlin,Germany.
    Abstract: We reconsider the justifications of R&D subsidies by Spencer and Brander (1983) and others by allowing firms to pool R&D investments and license innovations. In equilibrium R&D joint ventures are formed and licensing occurs in a way that eliminates the strategic benefits of R&D investment in the subsequent oligopoly game. Nevertheless, governments subsidize their domestic firms in order to raise their bargaining position in the joint venture. This holds true regardless of whether governments offer either unconditional or conditional subsidies. This suggests an alternative explanation of the observed proliferation of R&D subsidies.
    Keywords: patent licensing, industrial organization, R&D subsidies, research joint ventures, technology policy
    JEL: L13 O34
    Date: 2006–09
  5. By: Björn Johnson; Martin Lehmann
    Abstract: Cities often constitute relevant environments for interactive learning and innovation potentially capable of tackling sustainability problems. In this paper we ask if the concept of systems of innovation can increase our understanding of city dynamics and help promoting the sustainable development of cities. Through a combination of the innovation system approach and the perspective of creative cities, we argue that a slightly modified concept – sustainable city systems of innovation – may be helpful in this context. To underline this, we discuss certain ‘city-traits’ of sustainability and conclude that the new concept may be of special use for urban quality development and management.
    Keywords: Sustainability; innovation systems; creative city; urban quality; sustainable city systems of innovation
    JEL: O31 O15
    Date: 2006
  6. By: Francesco Laforgia; Francesco Lissoni
    Abstract: Many recent papers dealing with the issue of knowledge spillovers have relied on patent data to extract information on so-called mobile inventors that is inventors designated by patent applications filed by different companies. In this paper we follow in this tradition, but with the aim of setting straight a number of methodological issues. By making use of information on the identity and history of those applicants, we then propose a taxonomy of the phenomena behind multi-applicant inventorship, which distinguishes between job mobility, mobility as a result of M&As, a case which we suspect to be dominated by the markets for research and for technologies, and residuals cases. We then argue that different multi-applicant inventors’ categories have to do with different patterns of knowledge diffusion, which include both spillovers and markets for technology.
    Keywords: Patents; mobile inventors; multi-applicant inventorship; knowledge diffusion
    JEL: O31 O32
    Date: 2006
  7. By: Beatriz Dominguez; Juan-José Ganuza; Gerard Llobet (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: It is commonly argued that in recent years pharmaceutical companies have directed their R&D towards small improvements of existing compounds instead of more risky drastic innovations. In this paper we show that the proliferation of these small innovations is likely to be linked to the lack of market sensitivity of a part of the demand to changes in prices. Compared to their social contribution, small innovations are relatively more profitable than large ones because they are targeted to the smaller but more inelastic part of the demand. We also study the effect of regulatory instruments such as price ceilings, copyments and reference prices and extend the analysis to competition in research.
    Keywords: Health-care, pharmaceuticals, innovation.
    JEL: I11 I18 O31
    Date: 2006–01
  8. By: Kiessling, Johan (Dept. of Economics, Stockholm University)
    Abstract: This paper evaluates the global diffusion process for three ICT technologies: cellular telephony, Internet and personal computers to test the hypothesis that the difference between countries in institutional characteristics significantly affects the time to adoption of these technologies. The analysis shows that the quality of economic and financial institutions and, to a smaller degree political institutions, significantly affects the time to adoption of the studied ICT technologies. The institutional effects were not uniform during all stages of adoption and for all three technologies but the level effects were on average found to be of the same magnitude as those of education and GDP per capita. The results are robust also when controlled for a number of other possible determinants of productivity and growth as well as fixed country effects.
    Keywords: Barriers to technology adoption; Institutions; Technology diffusion
    JEL: O33
    Date: 2006–03–31
  9. By: Zhu, Pingfang (Research Institute of Econometrics and School of Economics, Shanghai University of Finance and Economics.); Li, Lei (Research Institute of Econometrics and School of Economics, Shanghai University of Finance and Economics.); Lundin, Nannan (Örebro University and Trade Union Institute for Economic Research (FIEF))
    Abstract: This paper examines the impact of R&D expenditure and technology import on the level and the growth of productivity, as well as on the general economic performance in manufacturing firms with various ownership structures in Shanghai, China. The empirical analyses are based on the firm-level information of a sample of manufacturing firms for the period 1998–2003. We find clear-cut evidence indicating that firms with foreign participation have a productivity advantage over their domestic counterparts. The expenditures on technology import not only have a direct and positive effect on productivity, but also indirectly enhance the absorptive capacity of firms to facilitate in-house R&D activities. This is particularly true for firms with foreign participation, or for firms in sectors with relatively high technical standards. Furthermore, R&D expenditure and technology import may also have positive effects on profitability and export performance, depending on the ownership structure of the firm and the technical standard in the sector.
    Keywords: Science and Technology policy; Science and Technology investment; R&D
    JEL: L52 O32 O38
    Date: 2005–07–08
  10. By: Anne Branciard (LEST - Laboratoire d'économie et de sociologie du travail - [CNRS : UMR6123] - [Université de Provence - Aix-Marseille I][Université de la Méditerranée - Aix-Marseille II])
    Abstract: Ce papier analyse historiquement les évolutions des institutions dans le SNRI français sur la décennie 1985-1996 et leur processus d'apprentissage d'un nouveau paradigme de production des connaissances et d'innovation, à partir du cas des sciences du vivant et des biotechnologies. Il examine, en terme de performance pour la construction d'un « espace d'innovation », les effets conjugués d'une part de l'action publique et de ses instruments pour favoriser à la fois une base de création de connaissances liées aux biotechnologies et la commercialisation des résultats de la recherche, et d'autre part de la diffusion d'un « modèle » de co-production des connaissances et d'hybridation entre activités scientifiques, techniques, industrielles, et politiques (modèle de la Triple Hélice), support de la « knowledge-based economy ». La construction de cet espace est entravée par le déficit de coordination institutionnelle, lié aux spécificités sociétales françaises (path dependancy). Ces évolutions, repérables dans les dispositifs d'action publique incitative qui tendent à substituer à l'action top/down de l'Etat une multiplication et une variété des acteurs de la construction des politiques publiques, s'inscrivent surtout dans l'émergence d'un nouveau référent de politique publique S§T qui nourrit une rhétorique dans l'appareil étatique ; mais elles préfigurent la mise en place d'institutions intermédiaires de transfert circulaire entre la recherche et le monde socioéconomique, qui seront soutenues par l'ouverture du jeu aux collectivités territoriales (« génopole » et autres institutions...).
    Keywords: politique S§T; espace d'innovation; sciences du vivant; génomique; biotechnologies; institution intermédiaire; système national de recherche et d'innovation; apprentissage institutionnel; dispositif d'action publique; Triple Hélice
    Date: 2006–09–25
  11. By: Møller, Charles (Department of Management Science and Logistics, Aarhus School of Business)
    Abstract: This paper proposes a research program on Business Process Innovation: Towards Global Supply Chain Intelligence. Few words are more ubiquitous in business or society today than “innovation”. This reflects that businesses are striving for ways to survive and thrive in an increasingly complex and connected world (IBM 2006). <p> Most industrial supply chains today are globally scattered and nearly all organizations rely on their Enterprise Information Systems (ES) for integration and coordination of their activities. In this context innovation inevitably is driven by advanced information technology. <p> Organizations today are required not only to operate effective business processes but they also need to accommodate to changing business conditions at an increasing rate. Consequently the ability to develop and implement new processes driven by the Enterprise Information Systems is a central competence in most industries, and furthermore it is a critical practice for a global enterprise. <p> The next practice in Global Supply Chain Management is Business Process Innovation. Business Process Innovation is the transformation of a global supply chain driven by a new advanced Enterprise Information Systems technology. This technology holds the potential to “close the control loop”, but until now few organizations have managed to unleash the full potential of global supply chain intelligence. Thus, there is an emerging need for managing the transformation and for new approaches that will lead to robust global supply chains. <p> This paper presents a conceptual framework for Business Process Innovation. A research proposal based on five interrelated topics is derived from the framework. The research program is intended to establish and to develop the conceptual framework for business process innovation and to apply this framework in a global supply chain context. These topics are presented in the following sections, but first the background for the program is discussed.
    Keywords: No keywords;
    Date: 2006–07–24
  12. By: Cuong Le Van (CES - Centre d'Economie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Olivier Bruno (GREDEG - [Université de Nice Sophia-Antipolis]); Bruno Masquin (GREDEG - [Université de Nice Sophia-Antipolis])
    Abstract: We develop a model of optimal pattern of economic development that is first rooted in physical capital accumulation and then in technical progress. We study an economy where capital accumulation and<br />innovative activity take place within a two sector model. The first sector produces a consumption good using physical capital and non skilled labor. Technological progress in the consumption sector is driven by the research activity that takes place in the second sector. Research activity which produces new technologies requires technological capital<br />and skilled labor. New technologies induce an endogenous increase of the Total Factor Productivity of the consumption sector. Physical and technological capital are not substitutable while skilled and non skilled labor may be substitutable.<br />We show that under conditions on the adoption process of new technologies, the optimal strategy for a developing country consist in accumulating<br />physical capital first; postponing the importation of technological capital to the second stage of development. This result is due to<br />a threshold effect from which new technologies begin to have an impact on the productivity of the consumption sector. However, we show that<br />once a certain level of wealth is reached, it becomes optimal for the economy to import technological capital to produce new technologies.
    Keywords: capital accumulation, two sector model, technological progress, new technologies, Total Factor Productivity, skilled labor, non skilled labor
    Date: 2006–09–26
  13. By: Paolo Garella (Dipartimento di Scienze Economiche, University of Bologna, Italy)
    Abstract: The present note shows that "innocuous" Minimum Quality Standards, namely below the lowest quality in a market, may have effects on equilibrium outcomes. Such a MQS reduces the incentive to invest in R&D by the quality-leading firm.
    Keywords: Regulation, Minimum Quality Standards, Oligopoly, R&D
    JEL: L0 L5
    Date: 2006–03–06
  14. By: Tavneet Suri (Sloan School, MIT)
    Abstract: This paper examines a well known empirical puzzle in the literature on technology adoption: despite the potential of technologies to increase returns dramatically, a significant fraction of households do not use these technologies. I study the use of hybrid maize and fertilizer in Kenya, where there are persistent cross-sectional differences in aggregate adoption rates with a large fraction of households switching in and out of adoption. By allowing for selection of farmers into technology use via comparative advantage differences, I examine whether the yield returns to adopting hybrid maize vary across farmers. If so, high average returns can coexist with low returns for the marginal farmer. My findings indicate the existence of two interesting subgroups in the population. A small group of farmers has potentially high returns from adopting the technologies. Yet, they do not adopt. This lack of adoption appears to stem from supply and infrastructure constraints, such as the distance to fertilizer distributors. In addition, a larger group of farmers faces very low returns to adopting hybrid maize, but chooses to adopt. This latter group might benefit substantially from the development of newer hybrid strains to increase yields. On the whole, the stagnation in hybrid adoption does not appear to be due to constraints or irrationalities.
    Keywords: Technology, Heterogeneity, Comparative Advantage
    JEL: C33 O12 Q12
    Date: 2006–09
  15. By: Uday Bhanu Sinha (Delhi School of Economics)
    Abstract: The paper deals with the issue of information sharing in a Cournot duopoly by an innovating firm in the face of a merger with its rival. The innovating firm would share information about the cost realization with its rival provided the market size is relatively small or, the R&D technology is relatively more efficient in a medium market size. However, in a large market, or in a medium market size with less efficient R&D technology, the innovating firm does not share information with its rival. We also show that the social welfare may be higher under incomplete information regime.
    Keywords: Information sharing, market size, R&D, merger and welfare.
    JEL: L13 O32
    Date: 2006–08
  16. By: Hagem, Cathrine (Dept. of Economics, University of Oslo)
    Abstract: The clean development mechanism (CDM) under the Kyoto Protocol may induce a technological change in developing countries. As an alternative to the CDM-regime, developing countries may accept a (generous) cap on their own emissions, let domestic producers invest in new efficient technologies, and sell the excess emission permits on the international permit market (cap&trade-regime). The purpose of this paper is to show how the gains from investment, and hence the incentive for investment in new technology may deviate between the two alternative regimes. We show that the difference in gains from investment depends on whether the producers face competitive or non-competitive output markets, whether the investment affects fixed or variable production costs and whether the producers can reduce emissions through other means than investment in new technology
    Keywords: Climate Policy; Technology Adoption; Emission Trading; Clean Development Mechanism; Technological Change
    JEL: L13 Q28
    Date: 2006–10–04
  17. By: Jay Pil Choi
    Abstract: This paper investigates how different damage rules in patent infringement cases shape competition when intellectual property rights are probabilistic. I develop a simple model of oligopolistic competition to compare two main liability doctrines that have been used in the US to assess infringement damages – the unjust enrichment rule and the lost profit rule. It also points out the logical inconsistency in the concept of the “reasonable royalty rates” when intellectual property rights are not ironclad.
    Keywords: probabilistic intellectual property rights, damage rules, reasonable royalty rates
    JEL: D80 K40 L10 L40 O30
    Date: 2006

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