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on Intellectual Property Rights |
| By: | James Bergin (Geary Institute & School of Economics, University College Dublin) |
| Abstract: | The intent of the patent system is to encourage innovation by granting the innovator exclusive rights to a discovery for a limited period of time: with monopoly power, the innovator can recover the costs of creating the innovation which otherwise might not have existed. And, over time, the resulting innovation makes everyone better off. This presumption of improved social welfare is considered here. The paper examines the impact of patents on welfare in an environment where there are large numbers of (small) innovators — such as the software industry. With patents, because there is monopoly for a limited time the outcome is necessarily not socially optimal, although social welfare may be higher than in the no-patent state. Patent acquisition and ownership creates two opposing incentives at the same time: the incentive to acquire monopoly rights conferred by the patent spurs innovation, but subsequent ownership of those rights inhibits innovation (both own innovation and that of others). On balance, which effect will dominate? In the framework of this paper separate circumstances are identified under which patents are either beneficial or detrimental to innovation and welfare; and comparisons are drawn with the socially optimal level of investment in innovation. |
| Date: | 2008–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:200808&r=ipr |
| By: | Dario Sacco (Socioeconomic Institute, University of Zurich); Armin Schmutzler (Socioeconomic Institute, University of Zurich) |
| Abstract: | The paper analyzes the effects of more intense competition on firms’ incentives to invest in process innovations. We carry out experiments based on two-stage games, where R&D investment choices are followed by product market competition. As predicted by theory, an increase in the number of firms from two to four reduces investments. However, a positive effect is observed for a switch from Cournot to Bertrand, even though theory predicts a negative effect in the four-player case. |
| Keywords: | R&D investment, intensity of competition, experiment |
| JEL: | C92 L13 O31 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0807&r=ipr |
| By: | Ivan Ledezma |
| Abstract: | This paper studies theoretically and empirically the consequences of defensive strategies in R&D races. Using a quality ladders model we allow for endogeneous incumbent R&D advantages explained by strategies seeking to limit knowledge diffusion. Market institutions appear to be crucial to foster aggregate R&D intensity and to determine who innovates. Regulatory provisions reducing the possibilites of defensive strategies in the process of production may indeed increase the incentives to carry out R&D. This effect is more likely to be observed when the size of innovation is high. Using time-series cross-section data of manufacturing industries among 17 OECD countries we test the relationship between regulation and R&D expenditure over value added. We allow for a differentiated effect of regulation for industries producing and using ICT. The evidence is consistent with the model's predictions. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2008-29&r=ipr |
| By: | Aschhoff, Birgit |
| Abstract: | The question of the allocation of public R&D funding is becoming particularly important when it comes to identifying the effects of state subsidies, in terms of input or output additionality. This analysis goes one important step further than the existing literature by including the time dimension. Using firm-level data on German manufacturing and knowledge-intensive service firms, this paper sheds light on the structure of the subsidy recipients over time. It turns out that participation in the funding scheme is quite stable. This is also confirmed by applying a multivariate approach. Firms having received funding in the past are more likely to be selected for public funding again. It is also important to control for the overall supply of subsidies. Besides, a firm’s size and knowledge capabilities increase the probability of entering the scheme. |
| Keywords: | R&D, Public Subsidies, Program Participation, Germany |
| JEL: | C20 H32 O38 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7227&r=ipr |
| By: | Lokshin, Boris (UNU-MERIT); Mohnen, Pierre (UNU-MERIT) |
| Abstract: | This paper examines the impact of the Dutch R&D tax incentives program, known as WBSO, on the wages of R&D workers. In our model these wages are partly determined by the governments WBSO tax disbursements. We construct detailed firm- and time specific R&D tax credit rates as a function of the R&D tax incentives scheme to capture the wage effects of the government R&D support. An instrumentalvariables econometric model is estimated using an unbalanced firm-level panel data covering the period 1996-2004. After controlling for firm and industry effects and business cycle fluctuations, R&D tax incentives are found to increase R&D wages. The R&D wage effect of these incentives is smaller than their effect on real R&D investment, but it is still sizeable. The elasticity of the R&D wage with respect to the fraction of the wage supported by the WBSO scheme is estimated at 0.1. |
| Keywords: | price effect of tax incentives, tax credits, panel data model, R&D workers, wages |
| JEL: | O32 O38 H25 J30 C23 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2008034&r=ipr |
| By: | Jutta Günther; Björn Jindra; Johannes Stephan |
| Abstract: | This paper analyses the extent of technological capability of foreign subsidiaries located in East Germany, and looks at the determinants of foreign subsidiaries’ technological sourcing behaviour. The theory of international production underlines the importance of strategic and regional level variables. However, existing empirical approaches omit by and large regional level factors. We employ survey evidence from the “FDI micro data- base” of the IWH, that was only recently made available, to conduct our analyses. We find that foreign subsidiaries are above average technologically active in comparison to the whole East German manufacturing. This can be partially explained by the industrial structure of foreign direct investment. However, only a limited share of foreign subsidiaries with R&D and/or innovation activity source technological knowledge from the East German innovation system. If a subsidiary follows a competence augmenting strategy or does local trade, it is more likely to source technological knowledge locally. The endowment of a region with human capital and a scientific infrastructure has a positive effect too. The findings suggest that foreign subsidiaries in East Germany are only partially linked with the regional innovation system. Policy implications are discussed. |
| Keywords: | East Germany, Regional Innovation System, Foreign Direct Investment |
| JEL: | O30 O38 F20 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:iwh:dispap:4-08&r=ipr |
| By: | Sebastian von Engelhardt (Friedrich Schiller University Jena, School of Economics and Business Administration) |
| Abstract: | Software is a good with very special economic characteristics. Taking a general deï¬nition of software as its starting-point, this article systematically elaborates the central qualities of the commodity which have implications for its production and cost structure, the demand, the contestability of software-markets, and the allocative efï¬ciency. In this context it appears to be reasonable to subsume the various characteristics under the following generic terms: software as a means of data-processing, software as a system of commands or instructions, software as a recombinant system, software as a good which can only be used in discrete units, software as a complex system, and software as an intangible good. Evidently, software is characterized by a considerable number of economically relevant qualities—ranging from network effects to a subadditive cost function to nonrivalry. Particularly to emphasise is the fact that software fundamentally differs from other information goods: First, from a consumer's perspective the readability and other aspects concerning how the information is presented, is irrelevant. Second, the average consumer/user is interested only in the funtionality of the algorithms but not in the underlying information. |
| Keywords: | digital goods, compatibility, information good, network effects, nonrivalry, open source, recombinability, software |
| JEL: | D82 D83 D62 D85 K11 L17 |
| Date: | 2008–06–04 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-045&r=ipr |