nep-ino New Economics Papers
on Innovation
Issue of 2008‒12‒14
three papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. Innovation, Imitation and Open Source By Rufus Pollock
  2. The efficiency and evolution of R&D Networks By Michael D. König; tefano Battiston; Mauro Napoletano; Frank Schweitzer
  3. Intellectual Property Disclosure as 'Threat' By Baker, Scott; Lee, Pak Yee; Mezzetti, Claudio

  1. By: Rufus Pollock
    Abstract: An extensive empirical literature indicates that, even without formal intellectual property rights, innovators enjoy a variety of first-mover advantages and that `imitation' is itself a costly activity. There is also accumulating evidence that an `open' approach to knowledge production can deliver substantial efficiency advantages. This paper introduces a formal framework incorporating all of these factors. We examine the relative performance of an `open' versus a `closed' (proprietary) regime, and explicitly characterise the circumstances in which an open approach, despite its effect on facilitating imitation, results in a higher level of innovation.
    Keywords: Innovation, Imitation, Intellectual Property, Openness, Open Source
    JEL: L17 L5 O3
    Date: 2008–11–20
  2. By: Michael D. König (ETH Zurich); tefano Battiston (ETH Zurich); Mauro Napoletano (Observatoire Français des Conjonctures Économiques); Frank Schweitzer (ETH Zurich)
    Date: 2008
  3. By: Baker, Scott (University of North Carolina, School of Law); Lee, Pak Yee (University of Leicester,Department of Economics); Mezzetti, Claudio (University of Warwick,Department of Economics)
    Abstract: This paper models the disclosure of knowledge via licensing to outsiders or fringe firms as a threat, useful in ensuring firms keep their commitments. We show that firms holding intellectual property are better able to enforce agreements than firms that don't. In markets requiring innovation to make a product, IP disclosure presents a more powerful threat than entry by the punishing firm alone. Occasionally, a punishing firm won't be able to translate its intellectual property into a full-blown product, making it impossible for it to enter the cheating firm's market and punish. Even if it can't make a product itself, the punishing firm can always credibly threaten to license the intellectual property it has on hand to someone else. With this intellectual property as a springboard, chances are at least one fringe firm will be able to do the translation, make the product and enter the cheating firm's market. In short, the potential for licensing increases the likelihood of punishment for uncooperative behavior.In the model, firms contract explicitly to ex-change knowledge and tacitly to coordinate the introduction of innovations to the marketplace. We find conditions under which firms can self-enforce both agreements. The enforcement conditions are weaker when (1) firms possess knowledge and (2) knowledge is easily transferable to other firms. The disclosure threat has implications for antitrust law generally, which are considered.
    Date: 2008

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