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on Intellectual Property Rights |
| By: | Ben Shiller; Joel Waldfogel |
| Abstract: | Economists have well-developed theories that challenge the wisdom of the common practice of uniform pricing. With digital music as its context, this paper explores the profit and welfare implications of various alternatives, including song-specific pricing, various forms of bundling, two-part tariffs, nonlinear pricing, and third-degree price discrimination. Using survey-based data on nearly 1000 students’ valuations of 100 popular songs in early 2008 and early 2009. We find that various alternatives – including simple schemes such as pure bundling and two-part tariffs – can raise both producer and consumer surplus. Revenue could be raised by between a sixth and a third relative to profit-maximizing uniform pricing. While person-specific uniform pricing can raise revenue by over 50 percent, none of the non-discriminatory schemes raise revenue’s share of surplus above 40 percent of total surplus. Even with sophisticated pricing, much of the area under the demand curve for this product cannot be appropriated as revenue. |
| JEL: | L12 L82 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15390&r=ipr |
| By: | Klaus Schmidt (University of Munich) |
| Abstract: | Many high technology goods are based on standards that require several essential patents owned by different IP holders. This gives rise to a complements and a double mark-up problem. We compare the welfare effects of two different business strategies dealing with these problems. Vertical integration of an IP holder and a downstream producer solves the double mark-up problem between these firms. Nevertheless, it may raise royalty rates and reduce output as compared to non-integration. Horizontal integration of IP holders solves the complements problem but not the double mark-up problem. Vertical integration discourages entry and reduces innovation incentives, while horizontal integration always benefits from entry and innovation |
| Keywords: | IP rights, complementary patents, standards, licensing, patent pool, vertical integration |
| JEL: | L1 L4 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:273&r=ipr |
| By: | Martinsson, Gustav (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: | We find that internal finance resources at the firm-level, measured by cash flow, play a non-trivial role for the number of patent applications, even after controlling for the standard variables of a patent study. The results are based on estimating panel count-data models on a sample of 2,700 Swedish manufacturing firms, with observations from the period 1997-2005. The cash-flow effect is larger during the aftermath of the bursting IT-bubble and for firms that are more likely to be financially constrained. Our results suggest that some firms reduce or stop applying for patents during periods of declining economic activity. |
| Keywords: | Financing constraints; Innovation; Corporate ownership; Intellectual property rights; Firm level panel data |
| JEL: | G32 O31 O34 |
| Date: | 2009–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0194&r=ipr |
| By: | David Encaoua (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Yassine Lefouili (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | In this paper, we revisit the issue of licensing ‘weak' patents under the shadow of litigation. Departing from the seminal paper by Farrell and Shapiro [2008], we consider innovations of any size and not only ‘small' innovations, and we allow the number of licensees to be less than the number of firms in the downstream industry. It is shown that the optimal two-part tariff license from the patent holder's perspective may either deter or trigger litigation, and conditions underwhich each case arises are provided. We also reexamine the claim that the licensing revenues from ‘weak' patents overcompensate the patent holder relative to what a natural benchmarkwould command. Finally we suggest two policy levers that may alleviate the harm raised by the licensing of ‘weak' patents. |
| Keywords: | Licensing Schemes ; Probabilistic Rights ; Patent Litigation |
| Date: | 2009–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00415747_v1&r=ipr |
| By: | Marc Baudry (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272); Béatrice Dumont (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen) |
| Abstract: | This article aims at estimating the optimal profile of renewal fees patent offices should implement. It is at the crossroad of two strands of literature. The first strand is the theoretical literature analysing renewal fees as an optimal revelation mechanism. The second strand is the econometric literature developing real option models of patent renewal decisions to assess the value of patents. Using data from the French patent office, we find that there is little room to lower the social cost of patents without affecting the monetary incentives to apply for a patent and innovate. We show that a menu of optimally defined profiles helps to further discriminate among patents. |
| Date: | 2009–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00419330_v1&r=ipr |
| By: | Anne Layne-Farrar; Klaus M. Schmidt (University of Munich) |
| Abstract: | The infamous Blackberry case brought new attention to so-called “patent trolls” and began the general association of trolls with “non-practicing” patent holders. This has had important legal consequences: Namely, patent holders have been denied injunctive relief because they did not practice the patents themselves. In this paper we analyze how patent holders –– both non-practicing and vertically integrated –– choose their royalties depending on the structure of the upstream and downstream markets and the types of licensing agreements available. We show that a vertically integrated firm has an incentive to raise its rivals’ costs and to restrict entry on the downstream market; incentives that do not hold for non-integrated patent holders. An automatic presumption that a non-integrated patent holder will charge higher royalties than a vertically integrated company is therefore unfounded. Whether a company charges “excessive” royalties depends on whether there is scope for hold-up, either because of sunk investments on the part of potential licensees or because of “weak” patents held by t he licensor. These factors are orthogonal to whether patent holders are practicing or not. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:275&r=ipr |
| By: | Rene Belderbos; Bart Leten; Shinya Suzuki |
| Abstract: | We examine the role of host countries' academic research strengths in global R&D location decisions by multinational firms. While we expect that a firm's propensity to perform R&D in a host country increases with the strength of local academic research, firms are expected to be heterogeneously positioned to benefit from academic research strengths due to differences in the capacity to absorb and utilize scientific knowledge. We find support for these conjectures in an analysis of foreign R&D activities in 40 host countries and 30 technology fields by 176 leading European, US and Japanese firms during the periods 1995-1998 and 1999-2002. Controlling for a wide range of host country factors, the number of relevant ISI publications by scientists based in the host country has a substantial positive impact on the propensity to conduct foreign R&D. The effect of academic research is significantly larger for firms with a stronger science orientation in R&D - as indicated by citations to scientific literature in prior patents. For host countries with a strong relevant science base, this greater responsiveness of science oriented firms more than offsets a generally greater inclination to concentrate R&D at home. The findings appear robust across a variety of specifications. |
| Keywords: | R&D internationalization, Knowledge sourcing, Absorptive capacity, Industry-science links |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd09-079&r=ipr |
| By: | Ang, James |
| Abstract: | Abstract The main objective of this paper is to explore the impact of financial sector reforms, financial deepening and intellectual property protection on the accumulation of knowledge for one of the world’s largest developing countries. The findings indicate that increased intellectual property rights protection is associated with higher knowledge accumulation. While financial deepening facilitates the accumulation of ideas, the implementation of a series of financial liberalization policies is found to have a non-linear effect. The results show that financial liberalization will exert a beneficial impact on technological deepening only if the financial system is sufficiently liberalized. |
| Keywords: | financial liberalization; ideas production; endogenous growth; India. |
| JEL: | O30 E58 O53 E44 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17656&r=ipr |
| By: | Meyer, Jenny |
| Abstract: | Recent Internet technologies and web-based applications, such as social software, are being increasingly applied in firms. Social software can be employed for knowledge management and for external communication enabling access to internal and external knowledge. Knowledge in turn constitutes one of the main inputs to service innovation. Hence, social software has the potential to support service innovation. Using data from 505 German Information- and Communication Technology (ICT) and knowledge-intensive service firms, this is the first paper which empirically analyses the question whether the use of social software applications triggers innovation. Thereby, it refers to a knowledge production function in which social software use constitutes the knowledge sourcing activity. The results reveal that there is a positive relationship between social software and service innovation. Since this result is robust when controlling for former innovative activities and the previous propensity to adopt new technologies and to change processes, the analysis suggests that the causality runs from social software to innovation. |
| Keywords: | Social software,web 2.0,service innovation,knowledge management |
| JEL: | O31 O33 M10 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09046&r=ipr |
| By: | Lee Branstetter; Kamal Saggi |
| Abstract: | This paper develops a North-South product model in which Southern imitation and the North-South flow of foreign direct investment (FDI) are endogenously determined. In the model, a strengthening of IPR protection in the South reduces the rate of imitation, which, in turn, increases the flow of FDI. The increase in FDI more than offsets the decline in production undertaken by Southern imitators, so that the South’s share of goods produced by the global economy increases. Furthermore, real wages of Southern workers increase even though prices of goods produced by multinationals exceed those of Southern imitators. The preceding results hold when Northern innovation is endogenously determined; in addition, the rate of innovation increases with a strengthening of Southern IPR protection. |
| JEL: | F23 F43 O31 O34 O41 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15393&r=ipr |