nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2006‒12‒01
fifteen papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. North-South Diffusion of a General Purpose Technology By Oscar Afonso; Alvaro Aguiar
  2. Intellectual Property Rights and National R&D Subsidy Policies in a Two-Country Schumpeterian Framework By Piotr Stryszowski
  3. International Patent Pattern and Technology Diffusion By Kurt A. Hafner
  4. Is Academic Entrepreneurship Good or Bad for Science? Empirical Evidence from the Max Planck Society By Guido Bünstorf
  5. Can´t block, must run: Small firms and appropriality By Justin Byma; Aija Leiponen
  6. Choosing intellectual protection : imitation, patent strength and licensing By David Encaoua; Yassine Lefouili
  7. Optimal Technology Policy with Imitation and Risk-Averting Households By Tapio Palokangas
  8. Northern and Southern Patent Novelty Requirements Harmonization, Growth and Trade By Gilles Koléda
  9. Trade and Private R&D in Mexico By Liliana Meza González; Ana Belén Mora Yague
  10. Impatience, International Competitiveness, and Political By Aurora Gómez Galvarriato; César L. Guerrero-Luchtenberg
  11. The selection of investment subsidy beneficiaries. An estimate of the differences between national and regional policymakers priorities By BECCHETTI LEONARDO; LONDOÑO BEDOYA DAVID
  13. Persistence of innovation, technological change and quality-adjusted patents in the US Pharmaceutical industry By Gautier Duflos
  14. Software and business methods patents: <br />Case law evolution and market strategies By Isabelle Liotard
  15. Piracy repression and “Proustian” effects in popular music markets By BECCHETTI LEONARDO; ELEUTERI SIMONE

  1. By: Oscar Afonso; Alvaro Aguiar
    Abstract: This paper studies the effects of the diffusion of a General Purpose Technology (GPT), that spreads first within the developed country of its origin (North), and then to a developing country (South). We use a general equilibrium model of growth, where each final good is produced by one of two available technologies. Each technology is characterized by a specific set of intermediate goods complemented by specific labor. The quality of intermediate goods is enhanced periodically by Schumpeterian R&D. When quality reaches a threshold level, a GPT arises in one of the technologies and spreads first to the other one, within the North. Then, it propagates to the South, following a similar sequence. Since diffusion is not even, neither intra nor inter-country, the GPT produces successive changes in the direction of technological knowledge and in inter and intra-country wage inequality.
    Keywords: North-South, General Purpose Technology, Direction of technological knowledge, Wage inequality
    JEL: J31 O31 O33
    Date: 2005–06
  2. By: Piotr Stryszowski
    Abstract: I present a two-country Schumpeterian growth model without scale effect, where both countries converge to parallel growth paths because of technological transfer. Two instruments are used by the lagging country to improve its position: R&D subsidies and improvement of patent protection. Because of additional effect on the labor market, the intellectual property protection tends to have more impact on country's relative position in the world's productivity rank than the direct subsidies to research.
    Date: 2005–06
  3. By: Kurt A. Hafner
    Abstract: The paper focuses on the impact of business related R&D spending on input factor productivity (IFP) using international patent applications as a technology diffusion channel. Considering the relationship amongst research and productivity, international patent pattern reflect the link between the source (R&D) and the use (IFP). To estimate patent related spill-over effects, I use the estimation techniques developed and proposed by Kao and Chiang (1998) in order to deal with nonstationary and cointegration and to obtain reliable coefficients. I find that patent related foreign R&D spillover effects are present and that impact on labor productivity for Non-G7 countries is higher due to foreign than domestic R&D activities.
    Keywords: Productivity, R&D, Technology Diffusion, Nonstationary Panels
    JEL: C12 C23 O30 O40
    Date: 2005–06
  4. By: Guido Bünstorf
    Abstract: Based on new data, this paper studies invention disclosure, licensing, and firm formation activities of Max Planck Institute directors over the time period 1985-2004, and analyzes their effects on scientists’ publication and citation records. The results are consistent with prior findings that inventing does not adversely affect research output. More mixed results are obtained with regard to academic entrepreneurship. The analysis raises questions vis-à-vis earlier explanations for positive relationships between inventing and publishing. It finds little evidence than inventors learn from interacting with firms. Likewise, license revenues do not enable scientists to step up their research activities.
    Keywords: Basic science, academic entrepreneurship, innovation, licensing, firm formation Length 32 pages
    JEL: I23 O31
    Date: 2006–11
  5. By: Justin Byma; Aija Leiponen
    Abstract: This empirical study examines small firms’ strategies towards appropriating the returns to their investments in innovation and finds that they are qualitatively different from those found in earlier studies of more generally representative samples of firms. First, few of the smallest firms appear to benefit from patenting. Even within this sample of small firms, only the largest firms were likely to identify patents as the most important method of appropriating innovation returns. Thus, the strategic choice for most small firms is between secrecy and speed to market. The smallest firms and those in low technology or complex product industries tend to prefer speed, while small investments in R&D, discrete product technologies, and affiliation with higher tech-nology industries explain preference for trade secrets. These results raise policy questions regarding the functioning of the existing systems of intellectual property rights when key policy goals include innovation by and growth of small firms. Furthermore, innovation policies that mandate collaboration are likely to significantly influence firms’ appropriability strategies.
    Keywords: SMEs, intellectual property rights, innovation, collaboration
    JEL: O31 O34 L24
    Date: 2006–11–21
  6. By: David Encaoua (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Yassine Lefouili (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I])
    Abstract: This paper investigates the choice of an intellectual protection regime for a process innovation. We set up a multi-stage model in which choosing between patent and trade secrecy is affected by three parameters : the patent strength defined as the probability that the right is upheld by the court, the cost of imitating a patented innovation relative to the cost of imitating a secret innovation, and the innovation size defined as the extent of the cost reduction. The choice of the protection regime is the result of two effects : the damage effect evaluated under the unjust enrichment doctrine and the effect of market competiton that occurs under the shadow of infringement. We find that large innovations are likely to be kept secret whereas small innovations are always patented. Furthermore, medium innovations are patented only when patent strength is sufficiently high. Finally, we investigate a class of licensing agreements used to settle patent disputes between patent holders and their competitors.
    Keywords: Patent, trade secrecy, imitation, licensing.
    Date: 2006–11–22
  7. By: Tapio Palokangas
    Abstract: A Schumpeterian growth model is constructed where R&D firms innovate to produce better versions of the products or imitate to copy existing innovations. Because firms cannot use their innovations or imitations as collateral, they finance their investment by issuing shares. Households save by purchasing these shares. The government affects the level of profits through competition policy. The main findings are the following. A small imitation subsidy slows down growth. In the first-best optimum collusion is socially optimal, but when the government cannot discriminate between innovation and imitation, it should promote product market competition.
    Keywords: Innovation, Imitation, Endogenous growth, Technology policy
    JEL: O41 O38
    Date: 2005–06
  8. By: Gilles Koléda
    Abstract: Abstract I study the incentive that governments have to protect IPR in a trading world economy, focusing on the patent novelty requirement and its effect on growth an trade. I consider a world economy with ongoing innovation in two regions. The North is assumed to have a higher wage than the South, possibly a larger market for innovative products and a greater capacity for innovation. I introduce the heterogeneity of innovation size together with the obligation, given by Patent Office of each region, that the innovation size be higher than the patent novelty requirement. This patent characteristic stands to be a useable instrument to promote innovation and growth, and also a strategic trade policy instrument. I numerically determine the Nash equilibrium of the strategic game that results of the setting of patent’s novelty requirement by each regional authority. Then I study effects of an harmonization of the two patent systems, that is the setting of a common patent novelty requirement by a supra-regional organization.
    Keywords: novelty requirement (patent height), innovation, growth, quality ladders, patent harmonization, TRIP, North and South
    JEL: O34 O40 F43
    Date: 2005–06
  9. By: Liliana Meza González; Ana Belén Mora Yague
    Abstract: Using the National Survey on Employment, Wages, Technology and Training (Enestyc), this paper tries to find the relationship between increasing trade and the proportion of total income Mexican manufacturing firms invest on R&D. Based on two cross-sectional and a panel estimation procedures, the results confirm the idea that increasing the exposure to foreign markets affect the innovative efforts of Mexican firms. We also find that the firms engaging in some kind of R&D do not conform a random sample. More specifically, our results show that, in 1992, the probability of finding a firm engaging resources in some kind of R&D increased with size, a market diversification measure, and a measure of industrial market power at a 2-digit level, while the intensity of the R&D effort depended, on market power and an industry concentration measure. For the 1999 estimation our results show that the probability of R&D investment at a firm level increased with size, a market diversification measure, and exposure to foreign competition, while the magnitude of the R&D effort of a firm was determined by the decrease in average import tariffs at the industry level and by the exporting efforts of the firm. We find strong complementarities between public and private innovation efforts in both years, but find that younger firms are doing stronger R&D efforts in 1999. The 1992- 99 balanced panel results show that exporting firms invest more in R&D while import competing firms invest less, once size, market power and other control variables are taken into account. Our estimation indicates that exporting give firms a great incentive to innovate, and that not only large, but also small firms contribute to the R&D efforts of a nation.
    Keywords: R&D, trade liberalization, foreign direct investment, exposure to foreing markets
    Date: 2005–06
  10. By: Aurora Gómez Galvarriato; César L. Guerrero-Luchtenberg
    Abstract: In this paper we present a model that describes how historical political constraints by themselves, or in combination with a sufficient degree of impatience, may be the cause of bankruptcy in some industries when a closed economy is opened to foreign competition. The model assesses the behavior of two types of firms, impatient and patient, which may or may not adopt foreign technology. The costs involved are not only economic but also political. These political costs are, nonetheless, measured in monetary terms. At some moment, which depends on the political constraints, a third firm enters the market, the foreign one. Depending on the national firms’ degree of impatience and the costs associated with political constraints, Nash equilibria, in which one or even both firms–at the moment the economy is opened–have to shut down, exist. All these strategies result to be subgame perfect equilibrium. Further, as a by-product, our results shed new light on the topic of temporary protection: The degree of impatience, by itself, my be the reason of why temporary protection may o may not fail to induce firms to adopt advanced technologies, even if the threat of liberalization is credible; furthermore, if both firms are sufficiently patient, both firms adopt the new technology and temporary protection results to be operative in order to maximize social welfare, so this equilibrium pass the “renegotiation-proof” criterium (along the equilibrium path).
    Date: 2005–06
    Abstract: We evaluate the effects of the partial delegation of the right to select of subsidy recipients from national to regional policymakers in Italy on a sample of more than 10,000 projects. We do so by comparing actual eligibility rankings with those simulated without considering the impact of newly introduced regional criteria. Our main results show that regional policymakers attach higher value to job creation by paying significantly more, in terms of disbursed subsidy, for any additional worker employed by financed projects. “Regional winners” are also smaller and younger, with their projects lasting longer and creating relatively more jobs than “national winners”. We also show that the relatively higher emphasis of regional policymakers on the creation of new plants contributes to the determination of part but not all these effects.
    Date: 2006–10
  12. By: Isabelle Liotard (CEPN - Centre d'économie de l'Université de Paris Nord - [CNRS : UMR7115] - [Université Paris-Nord - Paris XIII])
    Abstract: The purpose of this study is to stress on two important points. First of all, I wish to draw attention to the IP strengthening, more particularly in software and business methods areas because these informational goods could be viewed as generic assets in digital economy and have a key role for Internet development.<br />The objective of the second part, is to stress on strategic use of IP, especially for setting of technical standards. Past examples have explains this role and conclude to the determinant IP factor. We would like to explore the new use of IP in setting standards in Internet and investigate if the old strategies are the same or not. This part is based on work in progress. <br />Finally, we answer few questions of the IP strategic use in terms of innovation and use of legal proceedings.
    Date: 2006–11–13
  13. By: Gautier Duflos (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], CREST-LEI - [Ecole Nationale des Ponts et Chaussées])
    Abstract: This paper analyzes American pharmaceutical firms' persistence in innovating prior to the wave of mergers and acquisitions that accompanied the "Biotech revolution". We evaluate the impact of past innovative activity on firms' innovation propensities using a non-linear GMM estimator for exponential models that allows for predetermined regressors and linear feedback. We find that innovative activity at the firm level depends strongly on the technological importance of past innovations. In particular, breakthroughs depend largely on past innovations' scope, and this effect is likely to deter further pioneering behaviors rather than strengthen incentives to invest on non cumulative R&D. The results also shed light on the importance of small firms for the technological change in pharmaceuticals, and suggest that large firms may persist in using patents strategically to retain sales.
    Keywords: Patent citations, pharmaceutical industry, persistence in innovation.
    Date: 2006–11–13
  14. By: Isabelle Liotard (CEPN - Centre d'économie de l'Université de Paris Nord - [CNRS : UMR7115] - [Université Paris-Nord - Paris XIII])
    Abstract: In this paper we explore the evolution of the software industry and the increasing importance of patent protection. Through a set of case law, we show that the various American Courts of Justice for the one hand and the European Patent Office (EPO) one the other hand have the same point of view by granting software patents. We put in light the crucial decisions that conduct to this situation. The same cannot be said, however, for another specific object: business methods. These systems, deeply involved in e-business, are perceived, on a legal point of view, in different way sin Europe and in the US and accorded different levels of protection on either side of the Atlantic. We give also some figures of this phenomenon. They show the possible business methods protection in Europe in spite of the common argument of non-patentability of these systems in Europe. Furthermore, we also focus our attention on the effects of the intense use of industrial property on software and business methods, in terms of innovation, competition and the sharp rise in litigation.
    Date: 2006–11–13
    Abstract: We extend the Gayer-Shy (2005) approach and outline a theoretical model with typical characteristics of contemporary music markets in which record sales and life performances are two fundamental components of industry profits and illegal recording has positive effects on the second source of revenues. We show how (cross-sectional) network externalities and (intertemporal) “Proustian” effects (emotional quasi rents of adult consumers generated by “musical imprinting” when they were young) enhance the conflict of interest on piracy repression between artists and record publishers. Endogenisation of the bargained property right shares and of the penalty for piracy shows that, under reasonable parametric conditions, the absence of piracy repression maximizes total industry profits. We finally show that the conflict of interest on piracy may be solved via diversification of the record publisher revenues through his participation to live performance profits, or entry into the market of new products, such as hardware music players, which are complement to (legal and illegal) downloading.
    Date: 2006–10

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