nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2008‒06‒21
ten papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. Open Source Software, Closed Source Software or Both : Impacts on Industry Growth and the Role of Intellectual Property Rights By Sebastian von Engelhardt; Sushmita Swaminathan
  2. Intellectual Property Rights and Ex-Post Transaction Costs: the Case of Open and Closed Source Software By Sebastian von Engelhardt
  3. How does University Collaboration Contribute to Successful R&D Management? By Broström, Anders; Lööf, Hans
  4. Cumulative Innovation, Experimentation and the Hold-Up Problem By Pollock, R.
  5. Experimentation with Strategy and the Evolution of Dynamic Capability in the Indian Pharmaceutical Sector By Athreye, Suma; Kale, Dinar; Ramani, Shyama V.
  6. Assessing the assignation of public subsidies: Do the experts choose the most efficient R&D projects? By Néstor Duch-Brown; José García-Quevedo; Daniel Montolio
  7. Do Tighter Intellectual Property Rights Raise High-Tech Exports to the Developing World? By Olena Ivus
  8. The Relationship between Technology, Innovation, and Firm Performance: Empirical Evidence on E-Business in Europe By Koellinger, Ph.D
  9. Do firms' owners delegate both short-run and long-run decisions to their managers in equilibrium? By Evangelos Mitrokostas; Emmanuel Petrakis
  10. Preventing Innovative Cooperations: The Legal Exemptions Unintended Side Effect By Christian Growitsch; Nicole Nulsch; Margarethe Rammerstorfer

  1. By: Sebastian von Engelhardt; Sushmita Swaminathan
    Abstract: There is considerable debate regarding the use of intellectual property rights (IPR) to spur innovation in the software industry. In this paper we focus on the choice of intellectual property right regimes and industry growth. We begin by developing a growth optimal mixture of open source and closed source software. This optimal scenario is then used as a basis to examine the co-existence of open and closed source software within various institutional frameworks ranging from no protection, copyright to patent protection. Such an analysis is beneficial as it enables an objective comparison of the three scenarios under the assumption that both copyrights and patents serve the purpose for which they were designed. Our analysis, based on the existence or absence of spillovers, confirms that a co-existence is growth optimal for the industry. Further, we find that the move from no protection to copyright protection increases the maximum growth rate. However, despite assuming properly functioning patents, the benefits of moving from copyright to patent protection are less clear.
    Keywords: Intellectual Property rights, software, open source, spillovers, co-existence, innovative growth
    JEL: L17 L86 O31 O34 O41 O43
    Date: 2008
  2. By: Sebastian von Engelhardt (Friedrich Schiller University Jena, School of Economics and Business Administration)
    Abstract: The economic characteristics of software and transaction costs explain, why closed source and open source software co-exist. It is about the efficient use of a non- and anti-scarce resource. But because of ex-post transaction costs that lead to information asymmetries, some property rights regarding the resource "source code" are not exclusively separable. Thus, the first best allocation of property rights, that would yield an optimal usage of a source code, is not realizable. Or, that is to say, a first best realization of contracts is not feasible.<br> Hence, open and closed source software are two second best arrangements, both with specific assets and drawbacks. The principle of closed source benefits from direct (monetary) incentives and control, but has limits in its scope (size) because of transaction costs. Open source, on the one hand, benefits from its openness that creates spillovers and enables to incorporate human capital that is not acquirable for closed source firms. On the other hand, there are costs of openness, such as coordination costs (consensus finding, etc.) the danger of free riding or under provision, or forking.
    Keywords: open source, intellectual property rights, transaction costs, information goods, modeling property rights
    JEL: D23 L17 L22 O34
    Date: 2008–06–10
  3. By: Broström, Anders (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: The issue of through what processes R&D collaboration with universities affects a firms’ innovation performance remains under-researched. In particular, university relationships have not been fully integrated in the open innovation framework. This study explores the relationship between firms’ collaboration with universities and their capabilities for innovation, as perceived by R&D managers. Drawing on a series of interviews with R&D managers at 45 randomly selected firms collaborating with two research universities in Sweden, we explicitly recognise mechanisms through which university relationships contribute to successful R&D management.
    Keywords: University-Industry Link; Innovation; Technology transfer; R&D; Research collaboration
    JEL: I23 O31 O32
    Date: 2008–06–09
  4. By: Pollock, R.
    Abstract: Extending the basic model of two-stage cumulative innovation with asymmetric information to include `experimentation' by second-stage rms, we nd that the costs of a strong (versus weak) intellectual property (IP) regime may be substantially increased. In addition, these costs increase as experimentation becomes cheaper and as the differential between high and low value second-stage innovations grows, with the result that a weak IP regime is more likely to be optimal. Thus, technological change which reduces the cost of encountering and trialling new `ideas' implies a reduction in the socially optimal level of IP rights such as patent and copyright.
    Keywords: Cumulative Innovation, Hold-Up, Experimentation, Intellectual Property.
    JEL: K3 L5 O3
    Date: 2008–04
  5. By: Athreye, Suma (UNU-MERIT, and Brunel Business School); Kale, Dinar (Open University, and ESRC Innogen); Ramani, Shyama V. (Institut National de la Recherche Agronomique (INRA), and Ecole Polytechnique Paris)
    Abstract: This paper demonstrates that radical regulatory changes can be tantamount to technological revolutions by studying Indian pharmaceutical firms. It shows that radical regulatory changes such as the Indian Patent Act of 1970, the New Industrial Policy of 1991 and the signing of TRIPS (Trade Related Intellectual Property Rights System) in 1995 served to open up new economic opportunities and constraints in the wake of which the winners and losers were selected as a function of the dynamic firm capabilities most appropriate for the new market environment.
    Keywords: International Marketing, R&D Management, India, Pharmaceutical Sector, Corporate Strategy
    JEL: L11 L22 L51 L65 M31 O32 O34 O53
    Date: 2008
  6. By: Néstor Duch-Brown (IEB & Universitat de Barcelona); José García-Quevedo (IEB & Universitat de Barcelona); Daniel Montolio (IEB & Universitat de Barcelona)
    Abstract: The implementation of public programs to support business R&D projects requires the establishment of a selection process. This selection process faces various difficulties, which include the measurement of the impact of the R&D projects as well as selection process optimization among projects with multiple, and sometimes incomparable, performance indicators. To this end, public agencies generally use the peer review method, which, while presenting some advantages, also demonstrates significant drawbacks. Private firms, on the other hand, tend toward more quantitative methods, such as Data Envelopment Analysis (DEA), in their pursuit of R&D investment optimization. In this paper, the performance of a public agency peer review method of project selection is compared with an alternative DEA method.
    Keywords: Subsidies, R&D, DEA, Multi Criteria Decision Analysis, “peer review”.
    JEL: O32 C61 H25
    Date: 2008
  7. By: Olena Ivus
    Abstract: Despite over 20 years of debate, the TRIPs agreement remains very contentious. This paper evaluates the impact of tightening intellectual property rights (IPRs) in developing countries on developed countries' exports over the 1962-2000 period. Colonial origin is used to isolate exogenous variation in IPRs. The impact is then identified by examining the across industry difference in sensitivity to IPRs. The pre-TRIPs and post-TRIPs periods are examined separately. I find that for each 1% increase in the strength of IPRs, under the TRIPs agreement, developed countries' high-tech exports increased by 1.3% which amounts to additional exports of approximately $680 million per year (1994 US dollars).
    Date: 2008–01–12
  8. By: Koellinger, Ph.D (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This article analyzes the relationship between the usage of Internet-based technologies, different types of innovation, and performance at the firm level. Data for the empirical investigation originates from a sample of 7,302 European enterprises. The empirical results show that Internet-based technologies were an important enabler of innovation in the year 2003. It was found that all studied types of innovation, including Internet-enabled and non-Internet-enabled product or process innovations, are positively associated with turnover and employment growth. Firms that rely on Internet-enabled innovations are at least as likely to grow as firms that rely on non-Internet-enabled innovations. Finally, it was found that innovative activity is not necessarily associated with higher profitability. Possible reasons for this and implications are discussed.
    Keywords: information technology;e-business;innovation;firm performance;profitability
    Date: 2008–05–26
  9. By: Evangelos Mitrokostas (Department of Economics, University of Crete); Emmanuel Petrakis (Department of Economics, University of Crete, Greece)
    Abstract: The present paper explores the scope of strategic delegation, to the firms' R&D investments and market competition in a Cournot Oligopoly. The firms' owners' have two alternative strategies: either the Full Delegation (FD) one, in which firms' owners delegate both short-run and long-run decisions to their managers, or the Partial Delegation (PD) one, in which firms' owners delegate only short-run decisions to their managers. We investigate which delegation strategy will emerge in equilibrium, under the assumption that there is no credible commitment between the firms' owners over the strategy they will select. We find that the Universal Partial Delegation is never an equilibrium configuration. If the initial unit cost is relatively high (low), the Universal Full Delegation (Coexistence) configuration is the only endogenously emerging equilibrium. However, the above results are sensitive to the existence of the commitment assumption.
    Keywords: Strategic Delegation, Oligopoly, R&D Investments, Equilibrium Delegation Schemes.
    JEL: C20 C72 L22 O33
    Date: 2008–06–17
  10. By: Christian Growitsch; Nicole Nulsch; Margarethe Rammerstorfer
    Abstract: In 2004, European competition law had been faced with considerable changes due to the introduction of the new Council Regulation No. 1/2003. One of the major renewals was the replacement of the centralized notification system for inter-company cooperations in favor of a so-called legal exemption system. We analyze the implications of this reform on the agreements firms implement. In contrast to previous research we focus on the reform’s impact on especially welfare enhancing, namely innovative agreements. We show that the law’s intention to reduce the incentive to establish illegal cartels will be reached. However, by the same mechanism, also highly innovative cooperations might be prevented. To avoid this unintended effect, we conclude that only fines but not the monitoring activities should be increased in order to deter illegal but not innovative agreements.
    Keywords: Competition policy, competition law enforcement, legal exemption system
    JEL: K42 L40
    Date: 2008–06

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