nep-ino New Economics Papers
on Innovation
Issue of 2011‒02‒19
eight papers chosen by
Steffen Lippert
Massey University, Albany

  1. Rewarding innovation efficiently: Research spill-overs and exclusive IP rights By Vincenzo Denicol; Luigi A. Franzoni
  2. Stars and comets: an exploration of the patent universe By Carlo Menon
  3. Commercialization, Renewal and Quality of Patents By Svensson, Roger
  4. Advertising and R&D: Theory and evidence from France By Phillipe Askenazy; Thomas Breda; Delphine Irac
  5. Does the Support of Innovative Clusters Sustainably Foster R&D Activity? Evidence from the German BioRegio and BioProfile Contests By Dirk Engel; Timo Mitze; Roberto Patuelli; Janina Reinkowski
  6. Using Auctions for Pollution Rights as Indirect Incentives for Investments in Green Technologies By M. Fadaee; L. Lambertini
  7. The political economy of innovation; an institutional analysis of industrial policy and development in Brazil By Menezes, Jose H. V.
  8. "Demand Readiness Level" (DRL), a new tool to hybridize Market Pull and Technology Push approaches By Florin Paun

  1. By: Vincenzo Denicol (Indira Gandhi Institute of Development Research); Luigi A. Franzoni (Indira Gandhi Institute of Development ResearchInstitute of Economic Growth)
    Abstract: We investigate the conditions for the desirability of exclusive intellectual property rights for innovators as opposed to weak rights allowing for some degree of imitation and ex-post competition. The comparison between the two alternatives reduces to a specific "ratio test," which suggests that strong exclusive IP rights are preferable when competition from potential imitators is weak, the innovation attracts large R&D investments, and research spill-overs are small.
    Keywords: Kaplow test, research spill-overs, patents and trade secrets, independent invention defense, mandatory licensing
    JEL: K21
    Date: 2011–01
  2. By: Carlo Menon (Bank of Italy)
    Abstract: The analysis of patent and citation data has become a popular source of evidence on localized knowledge spillovers and innovation. Nevertheless, one aspect has been overlooked: the patent distribution across inventors is extremely skewed, as many inventors -- the comets -- register one or few patents, while a small number of inventors -- the stars -- register many patents. This raises a number of questions relating to the geography of innovation: do different categories of inventors interact with the local economic environment in the same way? Are they equally distributed over space or do they tend to concentrate? Is spatial proximity beneficial for their activity? Using a rich database on US inventors, we provide evidence suggesting that the two categories of patents are associated with different kinds of cities. We then test whether the activity of stars is beneficial for local comets, finding that a 10% increase in the number of patents authored by star inventors leads to a 3% increase in the number of patents developed by comet inventors.
    Keywords: localized knowledge spillovers, patents, innovation
    JEL: R10 O31
    Date: 2011–01
  3. By: Svensson, Roger (Research Institute of Industrial Economics (IFN))
    Abstract: One of the major reasons why inventors are awarded patents by governments is they encourage R&D investments and commercialization of inventions. If the patent holder commercializes his invention, he has stronger incentives to retain the patent. The purpose here is to empirically analyze the relationship between commercialization and the renewal of patents. At the same time, I take into account defensive patent strategies (e.g. deterring competitors from utilizing the patent) and pointedly ask if there are any third factors (quality of the patent) that affect the commercialization and renewal decisions. Using a detailed database of Swedish patents, I utilize a survival model to estimate how commercialization influences the patent renewal decision. Basic results show commercialization and defensive strategies increase the probability a patent will be renewed, but also that quality influences commercialization and renewal decisions. When controlling for endogenous commercialization decision, there is still a strong positive relationship between commercialization and renewal of patents. Thus, given the quality of the patent, if the owner decides to commercialize the patent on the margin, this leads to longer survival of the patent. With regard to commercialization modes, there is some evidence licensed patents and patents commercialized in original and new firms – but not acquired patents – survive longer than non-commercialized patents. Looking more closely at the contracts of acquired and licensed patents, contracts with both variable and fixed fees – but not contracts with either variable or fixed fees – survive longer than non-commercialized patents. However, the analysis about modes and contract terms does not take into account the endogeneity problem.
    Keywords: Patents; Renewal; Commercialization; quality; Commercialization modes; Contract terms; Survival models
    JEL: L24 O31 O34
    Date: 2011–01–31
  4. By: Phillipe Askenazy (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, IZA - Institute for the Study of Labor - IZA, Banque de France - Banque de France); Thomas Breda (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Delphine Irac (Banque de France - Banque de France)
    Abstract: This paper exploits a unique panel of 59,000 French firms over 1990-2004 to investigate the interactions between R&D, advertising and the competitive environment.The empirical findings confirm the predictions of a dynamic model that complements results known in static frameworks. First, more competition pushes Neck and Neck firms to advertise more to attract a larger share of consumers on their products or services. Second, for a given competitive environment, quality leaders spend more in advertising in order to extract maximal rents; thus, lower costs of ads may favor R&D.
    Keywords: advertising ; innovation ; competition ; Lerner
    Date: 2010–12
  5. By: Dirk Engel (University of Applied Science Stralsund; RWI); Timo Mitze (RWI; Ruhr University Bochum); Roberto Patuelli (University of Lugano; The Rimini Centre for Economic Analysis (RCEA)); Janina Reinkowski (ifo Munich)
    Abstract: In this paper, we evaluate the R&D enhancing effects of two large public grant schemes aiming at encouraging the performance of firms organized in clusters. These are Germany's well known BioRegio and BioProfile contests for which we compare the research performance of winning regions in contrast with non-winning and non-participating comparison regions. We apply Difference-in-Difference estimation techniques in a generalized linear model framework, which allows to control for different initial regional conditions in the biotechnology related R&D activity. Our econometric findings support the view that winners generally outperform non-winning participants during the treatment period, thus indicating that exclusive funding as well as the stimulating effect of being a "winner" seems to work in the short-term. In contrast, no indirect impacts stemming from a potential mobilizing effect of the contest approaches have been detected. Also, we find only limited evidence for long-term effects of public R&D grants in the post-treatment period. The results of our analysis remain stable if we additionally augment the model to account for the particular role of spatial dependence in the R&D outcome variables.
    Keywords: Biotechnology; R&D Policies; Cluster; Diff-in-Diff Estimation
    JEL: O38 R38 C23
    Date: 2011–02
  6. By: M. Fadaee; L. Lambertini
    Abstract: Acquired wisdom has it that the allocation of pollution rights to firms hinders their willingness to undertake uncertain R&D projects for environmental-friendly technologies. We revisit this issue in a model where firms strategically choose whether to participate in an auction to attain pollution permits, or instead invest in green R&D, to show that, somewhat counterintuitively, a side effect of the auction is in fact that of fostering environmental R&D in an admissible range of the model parameters.
    JEL: L13 Q55
    Date: 2011–02
  7. By: Menezes, Jose H. V.
    Abstract: This dissertation examines Brazilian industrial policies during the administrations of President Lula (2003-2010) and questions if innovation has truly been the main driver of those instruments. It provides a brief overview on the intersections of politics, economics, innovation and institutions as well as the main choices, incentives and alliances of the Brazilian government, which are illustrated by the Innovation Law, PITCE, PDP and campaign financing of President Lula's 2002 and 2006 candidacies. By adding to the analysis Brazil's exports, its balance of trade and the expenditures of BNDES, this research indicates a disconnect between the intentions and the results of the industrial policy. China and “low-tech” businesses seem to have become the real drivers of the government's agenda; the first for its importance to the Brazilian economy and the latter for its influence with government. Finally, while recognizing some positive results, it presents an alternative model based on a “high-tech” natural resources vision of development which could convert the current challenges into opportunities
    Keywords: Brazil; development; institutions; innovation; industrial policy
    JEL: O1 O38 O3
    Date: 2010–08–01
  8. By: Florin Paun (Laboratoire de recherche sur l'Industrie et l'Innovation - Université du Littoral Côte d'Opale)
    Abstract: Analyzing the evolution of the innovation models, from the linear process (“concept” for Schumpeter, “R&D push” for Abernathy, Utterback, “co-innovation” for Shapiro), integrated and systemic process (“coordination process” for Hardy, Iansiti, Chen, “innovative management” for Tucker) to total innovation management (3 totalities for XU) we could understand the evolution of the practices and actors of innovation. This paper identifies the importance of new tools in order to favor the technology transfer process. The author introduces the concept of "Demand Readiness Level", an additional scale to Technology Readiness Level, which will relate to the degree of maturity for the expression of a need by a customer on a given market including the lead markets for eco-innovation. The case of SMEs it will be in particularly addressed with the identification of specific "asymmetries in the innovation process" (Paun, F., 2009): risk asymmetry, cultural asymmetry and technology asymmetry.
    Keywords: Eco-innovation, TRL, Technology transfer, SME, Demand
    Date: 2011–02–08

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