nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2008‒07‒20
seven papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. Public R&D Funding and Entrepreneurial Innovation By Heli Koski
  2. Abuse of Dominance and Licensing of Intellectual Property By Rey, Patrick; Salant, David
  3. Evidence from the Patent Record on the Development of Cash Dispensing Technology By Batiz-Lazo, Bernardo; Reid, Robert J. K.
  4. Formal and Strategic Appropriability Strategies of Multinational Firms: A Cross Country Comparison By Faria, Pedro; Sofka, Wolfgang
  5. Universities and access to medicines: What is the optimal ‘humanitarian license’? By Annamaria Conti; Patrick Gaulé
  6. Does Open Innovation Foster Productivity? Evidence from Open Source Software(OSS) Firms By Elad Harison; Heli Koski
  7. Product Quality in a Simple OLG Model of Scientific Competition By Max Albert

  1. By: Heli Koski
    Abstract: ABSTRACT : This study does not find any significant direct relationship between the public R&D funding and the firms` innovation output. The firms obtaining the public R&D support were not performing significantly better, on average, than others. However, we find evidence that the public R&D finance has substantially influenced the innovation output of the firms that have undertaken certain types of innovations activities. Particularly, public funding targeted to the firms focusing on new business areas in their R&D projects seems successful. Certain types of collaboration seem to also generate better entrepreneurial performance in terms of innovation. Those large firms that have more intensively collaborated with the SMS firm partners in their publicly funded R&D projects have filed more patent applications than other companies.
    Keywords: innovation, public R&D subsidies, technology policy
    JEL: L10 O33 O38
    Date: 2008–07–07
  2. By: Rey, Patrick; Salant, David
    Abstract: Patent thickets, layers of licenses a firm needs to be able to offer products that embody technologies owned by multiple firms, and licensing policies have drawn increasing scrutiny from policy makers. Patent thickets involve complementary products, which gives rise to double marginalization -- the so-called royalty stacking problem -- and has the potential to retard diffusion of new technologies and reduce consumer welfare. This paper examines the impact of licensing policies of one or more upstream owners essential} intellectual property (IP) on the downstream firms that require access to that IP. The terms under which downstream firms can access this IP affects entry decisions, product diversity, prices and welfare. We consider both the case in which a single party controls the essential IP and the case in which different parties control complementary pieces of essential IP. We compare the outcome of several alternative standard licensing arrangements, such as flat rate access fees, royalty percentages, per unit fees, patent pools and cross-licensing arrangements, with or without vertical integration. We first consider the case where there is a single upstream owner of essential IP. Increasing the number of licenses enhances product variety, which creates added value, but it also intensifies downstream competition, which dissipates profits. We derive conditions under which the upstream IP monopoly will then want to provide an excessive or insufficient number of licenses, relative to the number that maximizes consumer surplus or social welfare. When there are multiple owners of essential IP, royalty stacking can reduce the number of the downstream licensees, but also the downstream equilibrium prices the consumers face. The paper derives conditions determining whether this reduction in downstream price and variety is beneficial to consumers or society. Finally, the paper explores the impact of alternative licensing policies. With fixed license fees or royalties expressed as a percentage of the price, an upstream IP owner cannot control the intensity of downstream competition. In contrast, volume-based license fees (i.e., per-unit access fees), do permit an upstream owner to control downstream competition and to replicate the outcome of complete integration. The paper also shows that vertical integration can have little impact on downstream competition and licensing terms when IP owners charge fixed or volume-based access fees.
    Keywords: Patents; Vertical Integration
    JEL: D43 L22 L40
    Date: 2008
  3. By: Batiz-Lazo, Bernardo; Reid, Robert J. K.
    Abstract: There are but a handful of systematic studies on the history of automated teller machines (ATMs) yet all fail to address the issue of paternity while perpetrating ‘common wisdom’ beliefs. This article looks at the birth of currency dispensing equipment, the immediate predecessor to the ATM. At the simplest level, at least four separate instance of innovation can reasonably claim to be the origin of the concept. However, the question as to who invented it is less illuminating than an understanding of the process of innovation itself and how these competing families developed into the modern conception of an ATM. Our research supports the view of user-driven innovation as surviving business records and oral histories tell of close involvement of bank staff in establishing requirements and choosing amongst alternative solutions in the implementation of first generation technology. This case thus shows greater understanding in the user’s role in shaping and directing technological development.
    Keywords: Cash dispensers (ATMs); History; Financial data processing; Patents; Research and development; User interfaces
    JEL: N20 O31
    Date: 2008–06–30
  4. By: Faria, Pedro; Sofka, Wolfgang
    Abstract: International knowledge spillovers, especially through multinational companies (MNCs), have recently been a major topic of discussion among academics and practitioners. Most research in this field focuses on knowledge sharing activities of MNC subsidiaries. Relatively little is known about their capabilities for protecting valuable knowledge from spilling over to host country competitors. We extend this stream of research by investigating MNC appropriability strategies that go beyond formal methods (patents, copyrights, trademarks) to include strategic ones (secrecy, lead time, complex design). We conceptualize the breadth and depth of a firm’s knowledge protection strategies and relate them to the particular situation of MNC subsidiaries. Moreover, we argue that their approaches differ with regard to host country challenges and opportunities. We address these issues empirically, based on a harmonized survey of innovation activities of more than 1,800 firms located in Portugal and Germany. We find that MNCs prefer broader sets of appropriability strategies in host countries with fewer opportunities for knowledge sourcing. However, munificent host country environments require targeted sets of appropriability strategies instead. We deduce that these results are due to a need for reciprocity to benefit fully from promising host country knowledge flows.
    Keywords: Appropriability, Multinational Companies, Patenting
    JEL: D83 F23 O31 O32
    Date: 2008
  5. By: Annamaria Conti (Chaire en Economie et Management de l'Innovation, Collège du Management de la Technologie, Ecole Polytechnique Fédérale de Lausanne); Patrick Gaulé (Chaire en Economie et Management de l'Innovation, Collège du Management de la Technologie, Ecole Polytechnique Fédérale de Lausanne)
    Abstract: This paper seeks to add an economic contribution to the current debate on using university licensing contracts to improve access to medicines in developing countries. We build a simple model in which we have a university licensing out an academic invention to a profit-maximizing pharmaceutical company. We compare three different types of licensing contracts that the university might use to enhance access to pharmaceuticals in the South: (1) an exclusive license limited to the North; (2) an exclusive license worldwide with a price cap in the South; and (3) an exclusive license worldwide with a price cap in the South and a clause specifying that the licensee would lose its exclusivity in the South if it does not supply the Southern market. We show that in a simple model with asymmetric information on production costs the latter type of contract dominates the two others.
    Keywords: technology licensing, university licensing, access to medicines
    JEL: L3 O32 O34 O38
    Date: 2008–02
  6. By: Elad Harison; Heli Koski
    Abstract: ABSTRACT : The primary findings of our study suggest that software firms that adopt the OSS-based business model are notably less productive than companies that merely offer proprietary software solutions. Our estimation results further show that the OSS business model adopters have not become notably less productive after beginning to supply OSS. Therefore, its seems that not the use of the OSS business model as such has reduced the OSS firms’ labour productivity but the firms that employed the OSS business model during the sampled years were, on average, of lower labour productivity type. Though the OSS business model use has not substantially improved the performance of software firms, we find that the OSS business model adopters strategically using the source code made available by the OSS community as part of their new software products, have performed better in terms of labour productivity than other adopters of the OSS business model.
    Date: 2008–07–07
  7. By: Max Albert (Justus Liebig University Giessen, Dept of Economics)
    Abstract: Using a simple OLG model where the research output of one generation provides inputs for the next, the paper explains how quality standards can become established in scientific competition. Researchers seek status, which they get if their results are used by the next generation. Quality is hereditary in the sense that input quality affects output quality. Hereditary quality allows for simple coordination on quality standards.
    Keywords: economics of science, methodology of economics, product quality, quality standards, scientific competition
    JEL: D02 L31 O31
    Date: 2008

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