nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2006‒11‒18
eleven papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. Structural Holes, Innovation and the Distribution of Ideas By Cowan, Robin; Jonard, Nicolas
  2. Academic entrepreneurship, patents, and spin-offs: critical issues and lessons for Europe By Chiara Franzoni; Francesco Lissoni
  3. Royalties vs. fees: How do firms pay for foreign technology? By Sharmila Vishwasrao
  4. Information Acquisition and Adoption of Organic Farming Practices: Evidence from Farm Operations in Crete, Greece By Margarita Genius; Christos Pantzios; Vangelis Tzouvelekas
  5. Optimum tariffs and patent length in a model of North–South technology transfer By Sharmila Vishwasrao; Srabana Gupta; Hassan Benchekroun
  6. Endogenous Technology Adoption Under Production Risk: Theory and Application to Irrigation Technology By Phoebe Koundouri; Celine Nauges; Vangelis Tzouvelekas
  7. World Technology Usage Lags By Diego A. Comin; Bart Hobijn; Emilie Rovito
  8. Sequential Innovation, Patents, and Imitation By James Bessen; Eric Maskin
  9. One-Way Essential Complements By M. Keith Chen; Barry J. Nalebuff
  10. comparative Advertising By Simon P. Anderson; Régis Renault
  11. Minerva Unbound: Knowledge Stocks, Knowledge Flows and New Knowledge Production By Lynne G. Zucker; Michael R. Darby; Jonathan Furner; Robert C. Liu; Hongyan Ma

  1. By: Cowan, Robin (UNU-MERIT); Jonard, Nicolas (Université de Luxembourg)
    Abstract: We model knowledge diffusion in a population of agents situated on a network, interacting only over direct ties. Some agents are by nature traders, others are by nature "givers": traders demand a quid pro quo for information transfer; givers do not. We are interested in efficiency of diffusion and explore the interplay between the structure of the population (proportion of traders), the network structure (clustering, path length and degree distribution), and the scarcity of knowledge. We find that at the global level, trading (as opposed to giving) reduces efficiency. At the individual level, highly connected agents do well when knowledge is scarce, agents in clustered neighbourhoods do well when it is abundant. The latter finding is connected to the debate on structural holes and social capital.
    Keywords: Innovation, Diffusion of Innovations, Knowledge, Information, Networks
    JEL: O31 D8
    Date: 2006
  2. By: Chiara Franzoni (A. Young School of Policy Studies, Georgia State University, USA); Francesco Lissoni (Università di Brescia and CESPRI-Università Commerciale Bocconi, Milano, Italy)
    Abstract: The paper proposes a definition of “academic entrepreneur” which draws from draws from the economics, history, and sociology of science. Academic entrepreneurs are scientists with a brilliant scientific record, who build their careers through discipline-building, the creation and of new labs and teams, and an appetite for the economic resources necessary to pursue those goals. Long-standing institutional features of national university systems explain to what extent commercial activities may or may not help academic entrepreneurs to progress in their careers. European policies for technology transfer should address these features, rather than aiming straight at university patenting and firm creation.
    Keywords: Academic entrepreneurship, Technology transfer
    JEL: I23 M13 O31
    Date: 2006–09
  3. By: Sharmila Vishwasrao (Department of Economics, College of Business, Florida Atlantic University)
    Abstract: The theoretical determinants of technology licensing contracts have been extensively studied but empirical evidence is scarce. We assemble a data set of all the foreign technology licensing agreements entered into by manufacturing firms in India between 1989 and 1993. Industry, firm, and contract characteristics are used to explain differences between the forms of payment in licensing contracts. Our findings support theoretical arguments; licensing contracts are more likely to use royalties when sales are relatively high, while increased volatility of sales and greater profitability favor fixed fee contracts. We also find that firms are more likely to use output based payments to control the sale and diffusion of R&D or brand intensive know-how to unaffiliated firms.
    Keywords: Technology transfer; licensing contracts
    JEL: F23 L14 L24 O32
    Date: 2004–10
  4. By: Margarita Genius (Department of Economics, University of Crete, Greece); Christos Pantzios; Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece)
    Abstract: The objective of the paper is to model the degree of organic farming adoption as well as the importance of technical information acquisition in the adoption decision process. In doing so, a trivariate ordered probit model is specified and implemented in the case of organic farming adoption in Crete, Greece. The results suggest that the decisions of information acquisition and adoption are indeed correlated and different farming information sources play a complementary role. Policies required to encourage organic farming adoption should be primarily structural while the provision of technical information is more crucial than conversion subsidies if total organic adoption is to be pursued.
    Keywords: Technology adoption, information acquisition, organic farming, Crete, Greece
    JEL: Q16 O31 D21 C35
  5. By: Sharmila Vishwasrao (Department of Economics, College of Business, Florida Atlantic University); Srabana Gupta (The Penn State University, Erie); Hassan Benchekroun (Department of Economics, McGill University, Montreal, Canada)
    Abstract: We study a developing country's choice of optimum tariffs and patent length in a theoretical model of trade and technology transfer. A Northern firm chooses whether to export or produce a new good in a Southern country. In the absence of patent protection, a high tariff is required to induce FDI. This reduces Southern welfare when the good is imported. The Southern government can combine a positive patent length with tariffs to reduce this loss and induce FDI. Thus Southern countries may have an incentive to protect patents, although never to the same extent as Northern countries.
    Keywords: Trade policy, Intellectual property rights, Foreign direct investment
    JEL: O34 F13 F23
    Date: 2004–10
  6. By: Phoebe Koundouri (Department of Economics, University of Reading, Reading, UK); Celine Nauges (LEERNA-INRA, Universite des Sciences Sociales, France); Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece)
    Abstract: The main objective of this paper is to present a theoretical framework that conceptualizes technology adoption as a decision process involving information acquisition by farmers who face yield uncertainty and vary in their risk preferences. This is done by integrating the microeconomic foundations used to analyze production uncertainty at the farm level with the traditional technological adoption models. First we follow the approach of Antle (1987) based on higher-order moments of profit, which enables flexible estimation of the stochastic technology without ad hoc specification of risk preferences. Then individual risk preferences are derived, which are then used to explain farmer’s decision to adopt modern water saving technologies. The proposed model is applied to a randomly selected sample of 265 farms located in Crete, Greece. Results show that risk preferences affect the probability of adoption and provide evidence that farmers invest in new technologies as a means of hedging against input related production risk.
    Keywords: risk attitudes, technology adoption, stochastic agricultural production, momentsbased estimation
  7. By: Diego A. Comin; Bart Hobijn; Emilie Rovito
    Abstract: We present evidence on the differences in the intensity with which ten technologies are used in 185 countries. To measure differences in technology use, we determine how long ago these technologies were used in the U.S. at the same intensity as they are used in the countries in our sample. We denote these time lags as technology usage lags and compare them with lags in real GDP per capita. We find that (i) many countries trail the U.S. in technology usage by several decades or more; (ii) usage lags are highly correlated with disparities in per-capita income; and (iii) usage lags are highly correlated across technologies.
    JEL: O33 O47 O57
    Date: 2006–11
  8. By: James Bessen (Boston University School of Law and Research on Innovation); Eric Maskin (School of Social Science, Institute for Advanced Study)
    Abstract: We argue that when discoveries are "sequential" (so that each successive invention builds in an essential way on its predecessors) patent protection is not as useful for encouraging innovation as in a static setting. Indeed, society and even inventors themselves may be better off without such protection. Furthermore, an inventor's prospective profit may actually be enhanced by competition and imitation. Our sequential model of innovation appears to explain evidence from a natural experiment in the software industry.
    Date: 2006–03
  9. By: M. Keith Chen (Yale School of Management, Yale University); Barry J. Nalebuff (Yale School of Management, Yale University)
    Abstract: While competition between firms producing substitutes is well understood, less is known about rivalry between complementors. We study the interaction between firms in markets with one-way essential complements. One good is essential to the use of the other but not vice versa, as arises with an operating system and applications. Our interest is in the division of surplus between the two goods and the related incentive for firms to create complements to an essential good. Formally, we study a two-good model where consumers value A alone, but can only enjoy B if they also purchase A. When one firm sells A and another sells B, the firm that sells B earns a majority of the value it creates. However, if the A firm were to buy the B firm, it would optimally charge zero for B, provided marginal costs are zero and the average value of B is small relative to A. Hence, absent strong antitrust or intellectual property protections, the A firm can leverage its monopoly into B costlessly by producing a competing version of B and giving it away. For example, Microsoft provided Internet Explorer as a free substitute for Netscape; in our model, this maximizes Microsoft's joint monopoly profits. Furthermore, Microsoft has no incentive to raise prices, even if all browser competition exits. This may seem surprising since it runs counter to the traditional gains from price discrimination and versioning. We also show that a essential monopolist has no incentive to degrade rival complementary products, which suggests that a monopoly internet service provider will offer net neutrality. There are other means for the essential A monopolist to capture surplus from B. We consider the incentive to add a surcharge (or subsidy) to the price of B, or to act as a Stackelberg leader. We find a small gain from pricing first, but much greater profits from adding a surcharge to the price of B. The potential for A to capture B's surplus highlights the challenges facing a firm whose product depends on an essential good.
    Keywords: Bundling, Complements, Monopoly leverage, Net neutrality, Price discrimination, Tying, Versioning
    JEL: C7 D42 D43 K21 L11 L12 L13 L41 M21
    Date: 2006–11
  10. By: Simon P. Anderson (Department of Economics, University of Virginia); Régis Renault (Université de Cergy-Pontoise (Théma))
    Abstract: Consumer information on products affects competition and profits. We analyze firms' decisions to impart product information through advertising: comparative advertising also allows them to impart information about rivals' products. If firms sell products of similar qualities, both want to advertise detailed product information that enables consumers to determine their matches: there is no role for comparative advertising. If qualities are sufficiently dissimilar, the high-quality one will not want to disclose match information. If legal, the low-quality firm rival would like to advertise match information about its rival. Such "comparative" advertising may have a detrimental impact on welfare by leading more consumers to consume the low quality product: this effect can dominate the benefits from improved consumer information and reduce social welfare if qualities are different enough.
    Keywords: comparative advertising, information, product differentiation, quality
    JEL: D42 L15 M37
    Date: 2006
  11. By: Lynne G. Zucker; Michael R. Darby; Jonathan Furner; Robert C. Liu; Hongyan Ma
    Abstract: The rate of regional growth of new knowledge in the field of nanotechnology, as measured by counts of articles and patents in the open-access digital library NanoBank, is shown to be positively affected both by the size of existing regional stocks of recorded knowledge in all scientific fields, and the extent to which tacit knowledge in all fields flows between institutions of different organizational types. The level of federal funding has a large, robust impact on both publication and patenting. The data provide further support for the cumulative advantage model of knowledge production, and for ongoing efforts to institutionalize channels through which cross-organizational collaboration may be achieved.
    JEL: O31 O33 R11 Z13
    Date: 2006–11

This nep-ipr issue is ©2006 by Roland Kirstein. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.