nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2011‒03‒05
thirteen papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. Trade Related Intellectual Property Rights (TRIPS) Agreement and the Agriculture Sector in Sri Lanka By Dilani Hirimuthugodage
  2. Examining the University Industry Collaboration Policy in Japan: Patent analysis By MOTOHASHI Kazuyuki; MURAMATSU Shingo
  3. Innovation and Entrepreneurship: A first look at linkage data of Japanese patent and enterprise census By MOTOHASHI Kazuyuki
  4. Does intellectual monopoly stimulate or stifle innovation? By Chu, Angus C.; Cozzi, Guido; Galli, Silvia
  5. Cultural preference on fertility and the long-run growth effects of intellectual property rights By Chu, Angus C.; Cozzi, Guido
  7. Evaluating the genetic progress of wheat in NSW, 1992-2009 By Redmond, Thomas; Nolan, Elizabeth; Martin, Peter
  8. Do We Need to Protect Intellectual Property Rights? By Vladimir Popov
  9. An emerging paradigm or just another trajectory? Understanding the nature of technological changes using engineering heuristics in the telecommunications switching industry By Arianna Martinelli
  10. Foreign Direct Investment, Spillovers and the Impact of Intellectual Property: Rights in the Seed Sector By Derwisch, Sebastian; Kopainsky, Birgit; Henson-Appollonio, Victoria
  11. Competition and R&D Cooperation with Universities and Competitors By Thomas Bolli; Martin Woerter
  12. Product innovation when consumers have switching costs By Salies, Evens
  13. A model of music piracy with popularity-dependent copying costs By Amedeo Piolatto; Florian Schuett

  1. By: Dilani Hirimuthugodage (Institute for Policy Studies)
    Abstract: The TRIPS agreement has given flexibility to all countries in selecting the protection methods and techniques for plant varieties and farmers traditional knowledge. Thus, most of the developed countries have adopted well-built intellectual property regimes using strong patent systems and plant breeder’s rights. The main reason for developed countries to choose patents for protection is due to their technological capabilities and the immense financial benefits that a patent system is expected to generate. Whereas, developing countries have weak regimes due to lack of financial and technical support.
    Keywords: Sri Lanka, Trade Related Intellectual Property Rights, TRIPS, Agriculture Sector
    JEL: F1
    Date: 2011–01
  2. By: MOTOHASHI Kazuyuki; MURAMATSU Shingo
    Abstract: This study is a quantitative analysis of Japanese patent information to examine the changes in the nature and the outcome of university-industry collaborations (UICs) following the enactment of UIC policies in the late 1990s. By considering UIC patents not only in joint university-industry patent applications but also in joint inventions organized by university personnel and corporate researchers, we discuss the status of UICs before the incorporation of national universities. Our analysis indicates that these policies increased the number of UIC patents in the late 1990s. However, strong IP policies pursued by universities may reduce the incentive for firms to commercialize inventions resulting from UIC collaborations.
    Date: 2011–02
  3. By: MOTOHASHI Kazuyuki
    Abstract: This paper presents the results of a comprehensive analysis of the innovative activities of the entire population of Japanese firms by using a linked dataset of Establishment and Enterprise Census and the IIP Patent Database (JPO patent application data). As of 2006, it was found that about 1.4% of about 4.5 million firms filed patents, and substantial patenting activities were found not only in the manufacturing field but also in a wide range of fields such as B2B services and financial sectors. In addition, a firmfs survival and growth are regressed with patenting and open innovation (measured by joint patent application with other firms and universities), and it is shown that innovative activities measured by patenting are positively correlated with such firm performance. It is also found that the relationship between patents and the survival rate is stronger for larger firms, while that between patents and firm growth is stronger for smaller firms.
    Date: 2011–02
  4. By: Chu, Angus C.; Cozzi, Guido; Galli, Silvia
    Abstract: This study develops an R&D-based growth model that features both vertical and horizontal innovation to shed some light on the current debate on whether patent protection stimulates or stifles innovation. Specifically, we analyze the growth and welfare effects of patent protection in the form of profit division between sequential innovators along the quality ladder. We show that patent protection has asymmetric effects on vertical innovation (i.e., quality improvement) and horizontal innovation (i.e., variety expansion). Maximizing the incentives for vertical (horizontal) innovation requires a profit-division rule that assigns the entire flow profit to the entrant (incumbent) of a quality ladder. In light of this finding, we argue that in order to properly analyze the growth and welfare implications of patent protection, it is important to disentangle its different effects on vertical and horizontal innovation.
    Keywords: economic growth; innovation; intellectual property rights
    JEL: O34 O31 O40
    Date: 2010–11
  5. By: Chu, Angus C.; Cozzi, Guido
    Abstract: How does patent policy affect long-run economic growth through the population growth rate? To analyze this question, we develop an R&D-based growth model with endogenous fertility. In recent vintages of R&D-based growth models in which scale effects are absent, the long-run growth rate depends on the population growth rate that is assumed to be exogenous. In this study, we develop a semi-endogenous-growth version of the quality-ladder model with endogenous fertility and human-capital accumulation to analyze an unexplored interaction between intellectual property rights, endogenous fertility and economic growth. We find that strengthening patent protection has a surprisingly negative effect on technological progress in the long run through endogenous fertility. Furthermore, a stronger cultural preference on fertility tends to magnify this negative effect of patent policy on long-run growth.
    Keywords: economic growth; endogenous fertility; patent policy
    JEL: O34 O31 O40
    Date: 2011–02
    Abstract: Employing a risk perception perspective, this paper studies the link between the investment manager’s human capital and his or her attitude towards the appropriability regime in the business proposal, and more specifically whether or not the technology is patent protected. Even though many researchers acknowledge the benefits related to patenting, agency theory suggests that patents may enlarge agency risk and may therefore result in VCs refraining from investing in proposals commercializing patented technology. We find that task-specific human capital, operationalized as the number of years experience as investment manager, positively affects the attitude towards patents. We find that some elements of general human capital, namely consulting experience, financial experience and entrepreneurial experience affect the attitude towards patents.
    Keywords: venture capital, selection behaviour, appropriability, human capital, risk perception
    Date: 2011–01
  7. By: Redmond, Thomas; Nolan, Elizabeth; Martin, Peter
    Abstract: Intellectual Property Regimes (IPRs) have been justified on the basis that they promote innovation, but it is not always clear that they do so. Empirical studies of IPRs in an Australian context have been limited. Plant variety protection is one form of IPR. The passing of the Australian Plant Breederâs Rights Act of 1994 has been followed by significant commercialisation of the wheat breeding industry. The purpose of this paper is to consider whether this commercialisation has benefited wheat productivity through varietal improvement. We estimate a linear crop production function, using a random effects Hausman Taylor estimator to evaluate differences in genetic contributions to productivity between public and private wheat varieties commercially released in NSW over the period 1992-2009 using crop varietal data. Results from the Hausman Taylor estimator show that private varieties, on average, have outperformed public varieties over the period, suggesting that Plant Breederâs Rights has promoted productive innovation in wheat. However, when we consider the best performing genetics of the varieties, public varieties have, in some years, outperformed privately bred varieties.
    Keywords: genetic change, technical change, innovation, wheat breeding, intellectual property, Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies,
    Date: 2011
  8. By: Vladimir Popov (New Economic School, Moscow)
    Abstract: Strict protection of IPR can have a negative effect on economic development. Regression of economic growth on these indices produces conventional results (positive effect of stricter protection of IPR on growth) only if indices of institutional capacity (government effectiveness, control over corruption) are not included into the right hand side. If they are included, they kill the effect of IPR protection (because they are very much correlated with the IPR protection indices), so it is hardly possible to separate the effects of stricter IPR protection from the impact of the general strength of institutions. The same procedure was used to evaluate the impact of the IPR protection regime on the average share of R&D expenditure in GDP and the results were largely the same: without control for the institutional capacity, IPR protection seems to stimulate R&D, but after controlling for the institutional indices the effect disappears. There is also a strong negative effect of stricter regime of protection of IPR on the proliferation of the most crucial technology of recent decades – computers. The increase in the total number of PCs in 1995-2005, after controlling for the level of development, the size of the country and the institutional index, is negatively correlated with the IPR protection index. If piracy of intellectual products allows to overcome the negative impact of IPR protection on the dissemination of new technologies, it is reasonable to talk not about costs of piracy, but about the benefits of piracy and the costs of stricter IPR protection.
    Date: 2010–05
  9. By: Arianna Martinelli
    Abstract: The theoretical literature on technological changes distinguishes between paradigmatic changes and changes in trajectories. Recently several scholars have performed empirical studies on the way technological trajectories evolve in specific industries, often by predominantly looking at the artifacts. Much less - if any - empirical work has been done on paradigmatic changes, even though these have a much more profound impact on today's industry. It follows from the theory that such studies would need to focus more on the knowledge level than on the artifact level, raising questions on how to operationalize such phenomena. This study aims to fill this gap by applying network-based methodologies to knowledge networks, represented here by patents and patent citations. The rich technological history of telecommunications switches shows how engineers in the post-war period were confronted with huge challenges to meet drastically changing demands. This historical background is a starting point for an in-depth analysis of patents, in search of information about technological direction, technical bottlenecks, and engineering heuristics. We aim to identify when such changes took place over the seven different generations of technological advances this industry has seen. In this way we can easily recognize genuine paradigmatic changes compared to more regular changes in trajectory.
    Keywords: technological trajectories; patents; network analysis; telecommunication manufacturing industry
    JEL: O30 O33 L96
    Date: 2011–02–24
  10. By: Derwisch, Sebastian; Kopainsky, Birgit; Henson-Appollonio, Victoria
    Abstract: The role of foreign direct investment and intellectual property rights in economic development is discussed widely in the literature. However, an integrating framework is missing to assess the role of FDI and IPR for agricultural development. This paper establishes a framework to assess the role of FDI and IPR for seed sector development in developing countries. The impact assessment is carried out with a System Dynamics model that shows local capacity development to develop new seed varieties in the scenario of a multinational company penetrating the market and spillovers occurring. Simulation runs reveal the impact of IPR on the quantity technology transferred by multinational companies and on spillovers. The development path of the local industry depends crucially on the capacity of the local seed sector when the multinational company enters. A pattern for seed sector development is derived.
    Keywords: Agribusiness, Agricultural and Food Policy, Agricultural Finance, Farm Management, Food Consumption/Nutrition/Food Safety, Production Economics, Research Methods/ Statistical Methods,
    Date: 2010–10
  11. By: Thomas Bolli (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Woerter (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: This paper analyzes the relationship between competition and R&D cooperation with universities and competitors. Our simple model predicts that more competitors reduce the incentives for horizontal cooperation as it diminishes the gains from “collusion”. Assuming that the value of synergies and spillovers created by cooperation depends on competition intensity reveals two distinct and opposing incentives for cooperation. While synergies foster R&D cooperation, spillovers may hinder cooperation. We mainly hypothesize that university cooperation corresponds to product innovation and hence quality competition, while horizontal cooperation lead to process innovations and therefore relates to price competition. We test these hypotheses based on Swiss firm-level panel data controlling for simultaneity of cooperation decisions and endogeneity of competition. Our empirical analysis supports the relevance of distinguishing between competition dimensions and cooperation partners, respectively. We find that price competition matters for both university and horizontal cooperation and it takes the form of an inverted U-shape. On the contrary, quality competition only matters for university cooperation and the relationship shows a U-form. Moreover we see that the number of principal competitors is significantly related only to cooperation between competitors and the relationship shows an inverted U-form. Hence, markets with a medium number of competitors are more receptive for horizontal cooperation. In sum these findings advance our understanding of the relationship between innovation and competition policy.
    Keywords: innovation cooperation, university cooperation, horizontal cooperation, number of competitors, price competition, quality competition, synergy, knowledge spillover, collusion
    JEL: O3
    Date: 2011–02
  12. By: Salies, Evens
    Abstract: Economists have long recognized that in free markets, incentives to innovate will be diluted unless some factors grant innovators with a temporary monopoly. Patenting is the most cited factor in the economic literature. This survey concentrates on another factor that confers innovators with first-mover advantage over their competitors, namely consumer switching costs, whereby a consumer makes an investment specific to her current seller, that must be duplicated for any new seller. In this survey, we list several components of switching costs that are relevant as regards to firm innovation behaviour. The aim of this classification is twofold. First, consumer switching cost theory has matured to the point that some classification of switching costs for both understanding innovative firm behaviour and building policy-oriented models is necessary. Second, the classification included in this paper addresses the confusion that has been existing so far regarding the distinction between ‘good’ or ‘bad’ switching costs, perceived or paid switching costs, and between switching and search costs. This paper then surveys the existing literature on the effect of switching costs on product innovation by firms and the way they compete for consumers. We also raise several important regulation and competition policy questions, using examples from the real world.
    Keywords: Consumer switching costs; Search costs; Product innovation; Competition policy; Economic methodology
    JEL: L14 L96 B21 L13 L52 D83 D4
    Date: 2010–09–17
  13. By: Amedeo Piolatto (IEB, University of Barcelona); Florian Schuett (TILEC, CentER, Tilburg University)
    Abstract: Anecdotal evidence and recent empirical work suggest that music piracy has differential effects on artists depending on their popularity. Existing theoretical literature cannot explain such differential effects since it is exclusively concerned with single-firm models. We present a model with two types of artists who differ in their popularity. We assume that the costs of illegal downloads increase with the scarcity of a recording, and that scarcity is negatively related to the artist’s popularity. Moreover, we allow for a second source of revenues for artists apart from CD sales. These alternative revenues depend on an artist's recognition as measured by the number of consumers who obtain his recording either by purchasing the original or downloading a copy. Our findings for the more popular artist generalize a result found by Gayer and Shy (2006) who show that piracy is beneficial to the artist when alternative revenues are important. In our model, however, this does not carry over to the less popular artist, who is often harmed by piracy even when alternative revenues are important. We conclude that piracy tends to reduce musical variety.
    Keywords: Piracy, file sharing, heterogeneous artists
    JEL: L82 K42
    Date: 2011

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