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on Intellectual Property Rights |
| By: | Eskil Ullberg (Interdisciplinary Center for Economic Science, George Mason University); |
| Abstract: | We are well familiar with the economic analysis of a patent system in terms of a temporary monopoly on products, benefitting from marginal process inventions, formulated under conditions of certain future demands. This article develops an experimental and dynamic microeconomic model useful for studying the patent system as a trade system, where patented technology is exchanged in organized competitive markets, under uncertain future demands. An economic system design is developed to study transparent prices of patents, dynamic gains from using a patent in multiple industries and the coordination of invention, intermediary and innovation activities using a linear contract on patents (fixed fee plus royalty on revenues). A trader is introduced together with inventor and innovator agents in order to multiply the value (use) of the technology. Three mechanism designs and two levels of presumption of validity of the underlying patent right are proposed. The analysis differs from previous work on patents, trade andeconomics in that the focus is on the competitive pricing of the rights themselves, using demand side bidding. An informal theory is outlined to price the dual values of a patent (investing and blocking). Based on this proposition tentative hypothesis are outlined for two initial experiments using the outlined economic system design.Creation-Date: 2010-04 |
| Keywords: | patents, organized markets, trade, licensing, technology |
| JEL: | D02 D23 L14 L24 O32 O34 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1016&r=ipr |
| By: | Eskil Ullberg (Interdisciplinary Center for Economic Science, George Mason University); |
| Abstract: | The patent system makes organized markets in patents with transparent prices possible. Such prices are here investigated as “signals” for inventors and innovators alike ofv aluable “technology areas”, in an experimental study. They inform decisions of specialized “firms” on allocation of resources for invention given a search space of induced technology values. The traditional hierarchical model of coordinating invention and innovation in a vertically integrated firm is replaced by coordination of these activities among specialized firms through a market with prices. The experimental study builds on a study focusing on price mechanisms with exogenous technology values to a study of an economic environment with “endogenous” technology values. The results suggest that coordination clearly takes place but differs considerably between the institutions and patent validity tested (a 3 x 2 design). As with the price study, demand-side bidding in both dimensions of the linear contract appears to yield the broadest search scope, and thus the best chances for the allocation of resources for invention. Multiple end-states are observed, especially for institutions with less demand-side bidding, indicating imprecise price signals for institutions similar to today’s personal exchange. Coordination with prices appears to increase the dynamic gains of the patent system through price information to reduce or better inform about the risk in investments in new technology. |
| Keywords: | patents, trade, licensing, intellectual property, experiments |
| JEL: | D02 D23 L14 L24 O32 O34 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1018&r=ipr |
| By: | Eskil Ullberg (Interdisciplinary Center for Economic Science, George Mason University); |
| Abstract: | The question of how prices on patents rights should be determined in impersonal exchanges is examined in a laboratory environment. Dynamic gains from such organized trade with public prices are recorded. The experiment introduces a competitive market with impersonal exchange mechanisms and prices in the traditionally hierarchical and personal exchange of patents. A tradable linear contract (fixed fee plus royalty)is investigated with three mechanism designs for demand-side bidding and two levels of presumed legal validity of the underlying patent. A “trader” can split contracts useful for multiple “industries,” creating dynamic gains, potentially increasing the use of technology in the economic system. Previous research on licensing has mostly been limited to one-dimensional auction mechanisms or static environments. The results indicate that agents appear to price the blocking value in the fixed fee and the investment value, net what is paid in fixed, in the royalty component, supporting a proposed theory of prices. Risks are thereby shifted from the invention to the consumer by means of this producer market, increasing the incentives for investment in invention, potentially resulting in a more competitive technology being developed and a more efficient economic system. The results give indications on proper integration of information and rules for mechanisms for organized market on patents with transparent prices. It also shows that intermediaries (traders) are critical to achieve dynamic gains from the system as are high presumed validity of patents. |
| Keywords: | patents, trade, licensing, intellectual property, experiments |
| JEL: | D02 D23 L14 L24 O32 O34 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1017&r=ipr |
| By: | Michele Boldrin; David K Levine |
| Date: | 2011–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levarc:786969000000000082&r=ipr |
| By: | Chu, Angus C.; Lai, Ching-Chong; Liao, Chih-Hsing |
| Abstract: | How do intellectual property rights that determine the market power of firms influence the effects of monetary policy on economic growth and social welfare? To analyze this question, we develop a monetary R&D-based growth model with elastic labor supply. We find that monetary expansion reduces growth and welfare through a decrease in labor supply that reduces R&D. Furthermore, a larger market power of firms strengthens these effects of monetary policy in the R&D model. In contrast, increasing the market power of firms dampens the growth and welfare effects of monetary policy in the AK model. Therefore, the market power of firms has drastically different implications on the welfare cost of inflation under the two growth engines (i.e., innovation versus capital accumulation). We also calibrate the two models using data in the US and the Euro Area to quantitatively evaluate and compare the welfare cost of inflation in the two economies. Finally, we simulate transition dynamics of the R&D model in order to compute the complete welfare changes from reducing inflation. |
| Keywords: | economic growth; inflation; monetary policy; patent policy; R&D |
| JEL: | O30 O40 E41 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30105&r=ipr |
| By: | Jung , Taehyun (CIRCLE, Lund University); Walsh , John P. (CIRCLE, Lund University) |
| Abstract: | This study examines the factors affecting modes of commercializing patented inventions using a novel dataset based on a survey of U.S. inventors. We find that technological uncertainty and possessing complementary assets raise the propensity for internal commercialization. We find that R&D collaboration with firms in a horizontal relationship is likely to increase the propensity to license the invention. In addition, the paper shows that macro-level environment conditions that affect exchange conditions, such as technology familiarity, influence the effects of capabilities on governance choice. |
| Keywords: | transaction cost economics; knowledge-based view; collaboration ties; commercialization; innovation; patent |
| JEL: | O32 |
| Date: | 2011–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2011_003&r=ipr |
| By: | Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)); Tåg, Joacim (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Why do so many high-priced acquisitions of entrepreneurial firms take place in network industries? We develop a theory of commercialization (entry or sale) in network industries showing that high equilibrium acquisition prices are driven by the incumbents' desire to prevent rivals from acquiring innovative entrepreneurial firms. This preemptive motive becomes more important when there is an increase in network effects. A consequence is higher innovation incentives under an acquisition relative to entry. A policy enforcing strict compatibility leads to more entry, but can be counterproductive by reducing bidding competition, thereby also reducing acquisition prices and innovation incentives. |
| Keywords: | Acquisitions; Commercialization; Compatibility; Entry; Network effects; Innovation; R&D; Regulation |
| JEL: | L10 L15 L26 L50 L86 O31 |
| Date: | 2011–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0867&r=ipr |
| By: | Massimo, Riccaboni; Jakub, Growiec; Fabio, Pammolli |
| Abstract: | We provide a detailed analysis of a generalized proportional growth model (GPGM) of innovation and corporate dynamics that encompasses the Gibrat’s Law of Proportionate Effect and the Simon growth process as particular instances. The predictions of the model are derived in terms of (i) firm size distribution, (ii) the distribution of firm growth rates, and (iii-iv) the relationships between firm size and the mean and variance of firm growth rates. We test the model against data from the worldwide pharmaceutical industry and find its predictions to be in good agreement with empirical evidence on all four dimensions. |
| Keywords: | Business firm size; firm growth distribution; Gibrat’s Law; Pareto distribution; lognormal distribution; size-variance relationship. |
| JEL: | L25 L65 L11 C49 |
| Date: | 2011–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30046&r=ipr |