nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2007‒07‒13
five papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. The Impact of Uncertain Intellectual Property Rights on the Market For Ideas: Evidence From Patent Grant Delays By Joshua S. Gans; David H. Hsu; Scott Stern
  2. Optimal Patent Breadth: Quantifying the Effects of Increasing Patent Breadth By Chu, Angus C.
  3. Welfare and growth impacts of innovation policies in a small, open economy. An applied general equilibrium analysis By Brita Bye, Taran Fæhn and Tom-Reiel Heggedal
  4. Complementarity or substitutability between private and public investment in R&D: An empirical study By SADRAOUI, Tarek; BEN ZINA, Naceur
  5. Innovations spread more like wildfires than like infections By Amavilah, Voxi Heinrich

  1. By: Joshua S. Gans; David H. Hsu; Scott Stern
    Abstract: This paper considers the impact of the intellectual property (IP) system on the timing of cooperation/licensing by start-up technology entrepreneurs. If the market for technology licenses is efficient, the timing of licensing is independent of whether IP has already been granted. In contrast, the need to disclosure complementary (yet unprotected) knowledge, asymmetric information, or search costs may retard efficient technology transfer. In these cases, reductions in uncertainty surrounding the scope and extent of IP rights may facilitate trade in the market for ideas. We employ a dataset combining information about cooperative licensing and the timing of patent allowances (the administrative event when patent rights are clarified). While pre-allowance licensing does occur, the hazard rate for achieving a cooperative licensing agreement significantly increases after patent allowance. Moreover, the impact of the patent system depends on the strategic and institutional environment in which firms operate. Patent allowance seems to play a particularly important role for technologies with longer technology lifecycles or that lack alternative mechanisms such as copyright, reputation, or brokers. The findings suggest that imperfections in the market for ideas may be important, and that formal IP rights may facilitate gains from technological trade.
    JEL: L24 L26 O32 O34
    Date: 2007–07
  2. By: Chu, Angus C.
    Abstract: In a generalized quality-ladder growth model, this paper firstly derives the optimal patent breadth and the socially optimal profit-sharing arrangement between patentholders. In this general-equilibrium setting, it identifies and derives a dynamic distortion of markup pricing on capital accumulation that has been neglected by previous studies on patent policy. Then, it quantitatively evaluates the effects of eliminating blocking patent and increasing patent breadth, and this exercise suggests a number of findings. Firstly, the market economy underinvests in R&D so long as a non-negligible fraction of long-run TFP growth is driven by R&D. Secondly, increasing patent breadth may be an effective solution to R&D underinvestment. The resulting effect on long-run consumption can be substantial because the harmful distortionary effects are relatively insignificant. However, the damaging effect of blocking patent arising from suboptimal profit-sharing arrangements between patentholders can be quantitatively significant. Finally, it considers the effect on consumption during the transition dynamics.
    Keywords: endogenous growth; intellectual property rights; patent breadth; R&D
    JEL: O34 O31
    Date: 2007–07
  3. By: Brita Bye, Taran Fæhn and Tom-Reiel Heggedal (Statistics Norway)
    Abstract: We explore how innovation incentives in a small, open economy should be designed in order to achieve the highest welfare and growth, by means of a computable general equilibrium model with R&D-driven endogenous technological change embodied in varieties of capital. We study policy alternatives targeted towards R&D, capital varieties formation, and domestic investments in capital varieties. Subsidising domestic investments, thereby excluding stimuli to world market deliveries, generates less R&D, capital formation, economic growth, and welfare, than do the other alternatives, reflecting that the domestic market for capital varieties is limited. Directing support to R&D rather than to capital formation generates stronger economic growth, a higher number of patents and capital varieties, and a higher share of R&D in total production. However, it costs in terms of lower production within each firm, where presence of sunk patent costs and mark-ups result in efficiency losses. The welfare result is, thus, slightly lower.
    Keywords: Applied general equilibrium; Endogenous growth; Research and Development
    JEL: C68 E62 H32 O38 O41
    Date: 2007–07
  4. By: SADRAOUI, Tarek; BEN ZINA, Naceur
    Abstract: In this paper, we investigate the relationship between private and public investment in R&D. Various models proposed in the literature to take account for several instruments policies as: (subsidies, taxes…) are estimated to verify if private and public R&D spending are complement or substitute. Our empirical study is based on a dynamic panel model for a sample of (23) countries over the period 1992-2004. This research is dealing with the relationship between private and public investment in R&D. Results based on the GMM method of Arellano and Bond (1991) and the tests of causality and unit root applied to the panel data show a positive and significant relation between private and public R&D.
    Keywords: R&D; Complementarity; Substituability; GMM; Dynamic Panel Data.
    JEL: C33 O32 O33
    Date: 2006–04–22
  5. By: Amavilah, Voxi Heinrich
    Abstract: Conventional theory says that innovations first diffuse slowly, then at faster paces, and finally at asymptotically declining rates. Economists and others explain such behavior with a variety of logistic models. Early models like the contagion model derive their predictive power from reliance on the history of the variables they are trying to predict. New social learning models improve the dynamics of diffusion across heterogeneous populations, while other studies propose various modifications. However, these extensions of the logistic and related models are still too orderly in structure and outcome. In reality one can expect both order from disorder and disorder from order. The argument of this paper is that innovations spread more like wild fire than like systematic epidemics. This analogy is no mere conjecture; some environments are more susceptible to catching fire than others. Just as the rate of the spread of fire is a function of fuel and other factors, so too is the spread of innovations, only that in the latter case the fuel is human population. Human population in general is a necessary fodder for the spread of innovations. The sufficient condition is the quality of the population which can favor or disfavor the spread of innovations, which explains why there are some random chances of finding islands untouched by fire surrounded by a sea of fire devastation.
    Keywords: Innovation spread; logistic model; derivative Gompertz; diffusion of innovations
    JEL: M3 O31 Z00 D89
    Date: 2007–07–07

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