|
on Innovation |
|
Issue of 2008‒10‒21
twelve papers chosen by Steffen Lippert Massey University Department of Commerce |
| By: | Mathias Dewatripont; Patrick Legros |
| Abstract: | In this paper we abandon the usual assumption that patents bring known benefits to the industry or that their benefits are known to all parties. When royalty payments are increasing in one's patent portfolio, private information about the quality of patents leads to a variety of distortions, in particular the incentives of firms to "pad" by contributing weak patents. Three main results that emerge from the analysis are that: (i) the threat of court disputes reduces incentives to pad but at the cost of lower production of strong patents; (ii) mitigating this undesirable side-effect calls for a simultaneous increase in the cost of padding, that is, a better filtering of patent applications; (iii) upstream firms have more incentives to pad than vertically-integrated firms which internalize the fact that patent proliferation raises the share of profits going to the upstream segment of the industry but at the expense of its downstream segment. This seems consistent with recent evidence concerning padding. |
| Keywords: | padding, royalty, standard setting organization, weak patent, Frand |
| JEL: | L24 L40 O31 O34 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2008_010&r=ino |
| By: | Daron Acemoglu; Kostas Bimpikis; Asuman Ozdaglar |
| Abstract: | This paper studies a simple model of experimentation and innovation. Our analysis suggests that patents may improve the allocation of resources by encouraging rapid experimentation and efficient ex post transfer of knowledge across firms. Each firm receives a private signal on the success probability of one of many potential research projects and decides when and which project to implement. A successful innovation can be copied by other firms. Symmetric equilibria (where actions do not depend on the identity of the firm) always involve delayed and staggered experimentation, whereas the optimal allocation never involves delays and may involve simultaneous rather than staggered experimentation. The social cost of insufficient experimentation can be arbitrarily large. Appropriately-designed patents can implement the socially optimal allocation (in all equilibria). In contrast to patents, subsidies to experimentation, research, or innovation cannot typically achieve this objective. We also show that when signal quality differs across firms, the equilibrium may involve a nonmonotonicity, whereby players with stronger signals may experiment after those with weaker signals. We show that in this more general environment patents again encourage experimentation and reduce delays. |
| JEL: | D83 D92 O31 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14408&r=ino |
| By: | Pehr-Johan Norbäck (Research Institute of Industrial Economics (IFN)); Lars Persson (Research Institute of Industrial Economics (IFN)); Joacim Tåg (Research Institute of Industrial Economics (IFN)) |
| Abstract: | In this paper, we study entrepreneurial innovations in an industry characterized by network effects. We show that the presence of network externalities tends to make the entrepreneur prefer sale to entry. Moreover, we also show that the incentive to innovate for entry decreases when network effects become stronger, whereas there is an increase in the incentive for innovation for sale. Moreover, we show that increasing the degree of industry-wide standardization furthers the goal of increasing entry by entrepreneurs. However, this may come at the cost of reducing the research intensity by reducing the bidding competition among incumbents over the innovations of entrepreneurs. |
| Keywords: | Entrepreneurship, Entry, Compatibility, Innovation, Network Effects, Standardization. |
| JEL: | D40 L10 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0802&r=ino |
| By: | Schroth, Enrique (Faculty of Economics and Business, University of Amsterdam); Szalay, Dezsö (Department of Economics, University of Warwick) |
| Abstract: | This paper studies the impact of financing constraints on the equilibrium of a patent race. We develop a model where firms finance their R&D expenditures with an investor who cannot verify their effort. We solve for the optimal financial contract of any firm along its best-response function. In equilibrium, any firm in the race is more likely to win the more cash and assets it holds prior to the race, and the less cash and assets its rivals hold prior to the race. We use NBER evidence from pharmaceutical patents awarded between 1975 and 1999 in the US, patent citations, and COMPUSTAT to measure the effect of all the racing firms' cash holdings on the equilibrium winning probabilities. The empirical findings support our theoretical predictions. |
| Keywords: | Patent Race ; optimal contract ; innovation ; financial constraints |
| JEL: | G24 G32 L13 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:873&r=ino |
| By: | Gaetan de Rassenfosse; Bruno van Pottelsberghe de la Potterie |
| Abstract: | This paper investigates whether patent counts can be taken as indicators of macroeconomic innovation performance. The empirical model explicitly accounts for the two components of patenting output: research productivity and patent propensity. The empirical analysis aims at explaining the `correct' number of priority filings in 34 countries. It confirms that the two components play a substantial role as witnessed by the impact of the design of several policies, namely education, intellectual property and science and technology policies. A major policy implication relates to the design of patent systems, which ultimately induces, or allows for, aggressive patenting strategies. |
| Keywords: | education policy; patent policy; propensity to patent; R&D productivity; S&T policy |
| JEL: | O30 O38 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2008_007&r=ino |
| By: | Grimpe, Christoph; Patuelli, Roberto |
| Abstract: | Nanomaterials are seen as a key technology for the 21st Century, and much is expected of them in terms of innovation and economic growth. They could open the way to many radically new applications, which would form the basis of innovative products. In this context, it seems all the more important for regions to put their own innovation systems in place, and to ensure that they offer a suitable location for such activities in order to benefit from the expected growth. Many regions have already done so by establishing ‘science parks’ and ‘nanoclusters’. As nanomaterials are still in their infancy, both public research institutes and private businesses could play a vital role in the process. This paper investigates what conditions and configurations allow a regional innovation system to be competitive in a cutting-edge technology like nanomaterials. We analyse European Patent Office data at the German district level (NUTS-3) on applications for nanomaterial patents, in order to chart the effects of localised research and development (R&D) in the public and private sector. We estimate two negative binomial models in a knowledge production function framework and include a spatial filtering approach to adjust for spatial effects. Our results indicate that there is a significant positive effect of both public and private R&D on the production of nanomaterial patents. Moreover, we find a positive interaction between them which hints at the importance of their co-location for realising the full potential of an emerging technology like nanomaterials. |
| Keywords: | nanotechnology, innovation, patents, Germany, spatial autocorrelation, spatial filtering |
| JEL: | L60 O32 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7387&r=ino |
| By: | Gaétan de Rassenfosse (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and ECARES, Université Libre de Bruxelles, Brussels.); Bruno van Pottelsberghe (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles and ECARES, Université Libre de Bruxelles, Bruegel, Brussels and CEPR, London.) |
| Abstract: | This paper investigates whether patent fee policies are a potential factor underlying the boom in patent applications observed in major patent offices. We provide the first panel-based evidence suggesting that fees affect the demand for patents in three major patent offices (EPO, USPTO and JPO), with a price elasticity of about -0.4 (similar to that of the residential demand for oil or water). The laxity of fee policies adopted by patent offices over the past 25 years therefore contributed, to a significant extent, to the rising propensity to patent observed since the mid-nineties. This is especially true at the European Patent Office, which has dramatically decreased its fees since the mid-1990s. |
| Keywords: | patent cost, patenting fees, price elasticity, patent systems, propensity to patent |
| JEL: | O30 O31 O38 O57 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:08-031&r=ino |
| By: | Osanu Onodera; Hann Earl Kim |
| Abstract: | This paper is one of five case studies which is a part of a larger project looking at the various effects that trade and investment can have on innovation. This paper studies the effect of trade and investment liberalisation on Korea’s Information and communication technology (ICT) sector and finds that trade and investment have played a crucial role in innovation in the sector. In the initial stages of development, imported capital goods and components, joint ventures, licensing and Original Equipment Manufacturer (OEM) contracts were important sources of technology and exports were key to gain the necessary economies of scale for innovation. Free trade and investment policies in the 1990s and stronger protection of intellectual property rights have led to an increase in R&D and innovation and has led to the transformation of Korea into a knowledge based economy in the recent decade. |
| Keywords: | Korea, innovation, ICT, intellectual property rights, patents, information and communication technologies, trade reform, Information Technology Agreement |
| JEL: | O |
| Date: | 2008–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:77-en&r=ino |
| By: | Gustavsson Tingvall, Patrik (China Economic Research Center (CERC)); Karpaty, Patrik (Department of Economics) |
| Abstract: | The central prediction of the Aghion et al. (2005) model is an inverted U-shaped relation between innovation and competition. The model is built on the assumption of a product market and has not yet been empirically tested on service-sector firms. Using detailed firm-level data, we find the inverse U-shaped relation to hold for both small and large service-sector firms. However, non-exporting service firms deviate from the overall pattern. A more detailed breakdown of innovation expenditures shows that the inverse U-shaped pattern holds for both intramural R&D and training, but not for extramural R&D. Finally, as competition increases, small firms tend to seek more strategic alliances with competitors while large firms tend to decrease their collaboration with competitors. To some extent, the behavior of large firms can be due to their greater capacity to handle innovation projects internally and as competition increases, so does the payoff of an edge to competitors. |
| Keywords: | R&D; innovation; competition; service sector |
| JEL: | D40 L10 L60 O30 |
| Date: | 2008–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hastef:0702&r=ino |
| By: | Arjan Lejour |
| Abstract: | Innovation is a policy area in which the European Union (EU) has the competence to support, coordinate and supplement Member States’ policies according to the new Lisbon Treaty (2007). The Member States (MS) have the primacy in this area and the principles of subsidiarity and proportionality are applicable to decide whether EU support, coordination or supplementation of MS policies is justified.<BR> This paper presents a detailed subsidiarity test. It is applied to three innovation support measures as part of the Entrepreneurship and Innovation Programme of the Competitiveness and Innovation Framework Programme of the European Commission. These measures are access to finance for the start-ups and growth of SMEs and investment in innovation activities, networks in support of business and innovation-community grants (new Enterprise Europe Network), and the Intellectual Property Rights Helpdesk. |
| Keywords: | innovation policy; subsidiarity; European Union |
| JEL: | O38 H77 H87 F15 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:memodm:208&r=ino |
| By: | Srinivasan, C.S.; Crost, Benjamin |
| Abstract: | Starting with a brief overview of trends in plant variety protection (PVP) in the UK since inception of PVP legislation, this paper assesses the strength of incentives for innovation provided by the PVP regime. We modify and extend models from the patent literature that attempt to infer the private value of innovations from the behaviour of titleholders in relation to the annual renewal of protection. Our results suggest that the average private return to protection from new wheat varieties is fairly modest and that the distribution of these returns is highly skewed. This implies that a large proportion of PVP certificates have very little economic value. The move towards stronger forms of protection for plant variety innovations and the (successful) clamour from the industry for imposition of royalties on farm-saved seed of protected varieties can be understood as a response to the declining returns from variety innovations in agricultural crops brought about by increasing competition and accelerated turnover of varieties. Anecdotal evidence regarding the declining viability of conventional plant breeding for agricultural crops in the UK is also supported by our results. |
| Keywords: | Research and Development/Tech Change/Emerging Technologies, |
| Date: | 2008–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aes007:7987&r=ino |
| By: | Michiels, An; Koo, Bonwoo |
| Abstract: | "Plant transformation research has achieved outstanding progress in the development of transgenic crops over the past decades, and the research results have been spread through journal publications and patents. With the recent emergence of stronger intellectual property rights, investments in crop research and the landscape of plant transformation research have changed, along with the patterns of knowledge dissemination. In this paper, we discuss the recent trends in plant transformation research by examining patent and journal publication data during the last decade. The data analysis shows that there have been significant shifts toward applied research by developing countries and toward patenting as a means of knowledge dissemination during the past few decades, reflecting the increasing role of the private sector in developing countries in crop improvement research." from authors' abstract |
| Keywords: | Biotechnology research, patents, Crop improvement, Science and technology, Genetic resources, Biodiversity, Journal publication, Developing countries, |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:795&r=ino |