nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2011‒12‒13
six papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. Patent Length, Investment and Social Welfare By James Bergin
  2. Licensing radical product innovations to speed up the diffusion By Vardan Avagyan; Mercedes Esteban Bravo; Jose Vidal-Sanz
  3. Exploring over the Presumed Identity of Emerging Technology By Thomas Gillier; Gérald Piat
  4. Technology Change: Sources and Impediments By Gustav Ranis; Mallory Irons; Yanjing Huang
  5. Overview of the charging situation for digital contents in Japan: From the viewpoint of compensation for private sound and visual recording By Kato, Naonori; Nogawa, Hiroki; Ueda, Masahi
  6. Entrepreneurial innovations and taxation By Andreas Haufler; Pehr-Johan Norbaeck; Lars Persson

  1. By: James Bergin (Queen's University)
    Abstract: The intent of the patent system is to encourage innovation by granting the innovator exclusive rights to a discovery for a limited period of time: with monopoly power, the innovator can recover the costs of creating the innovation which otherwise might not have existed. And, over time, the resulting innovation makes everyone better off. This presumption of improved social welfare is considered here. The paper examines the impact of patents on welfare in an environment where there are large numbers of (small) innovators. With patents, because there is monopoly for a limited time the outcome is necessarily not socially optimal, although social welfare may be higher than in the no-patent state. Patent acquisition and ownership creates two opposing incentives at the same time: the incentive to acquire monopoly rights conferred by the patent spurs innovation, but subsequent ownership of those rights inhibits innovation (both own innovation and that of others). On balance, which effect will dominate? In the framework of this paper separate circumstances are identified under which patents are either beneficial or detrimental to innovation and welfare; and comparisons are drawn with the socially optimal level of investment in innovation.
    Keywords: Patents, Investment in R&D, Welfare
    JEL: D61 D64 O31 O34
    Date: 2011–10
  2. By: Vardan Avagyan; Mercedes Esteban Bravo; Jose Vidal-Sanz
    Abstract: Inventors can commercialize innovative products by themselves and simultaneously license the technology to other firms. The licensee may cannibalize sales of the licensor, but this can be compensated by gains from royalties. We show in this paper how licenses can be used strategically to speed up the new product diffusion process in two instances of markets: (i) a market with strong Intellectual Property Rights (IPR), and (ii) a market with weak IPR holder and pirate rivals. The main findings suggest that licensing is a beneficial strategy for a licensor in the context of strong IPR, because licensor benefits from the royalties, the advertising investment and positive word-of-mouth effects by licensees. We compare this result with a weak IPR context, where piracy speeds up the product diffusion but this does not compensate IPR holder for the sales loss effect who is willing to license to get some royalties. However, pirates do not generally find interesting the licensing agreement. We present a comparative statics analysis based on numerical simulation.
    Keywords: Product diffusion models, Licensing, Optimal control and differential games
    Date: 2011–11
  3. By: Thomas Gillier (CITE - Centre pour l'Innovation Technologique et Entrepreneuriale - Grenoble Ecole de Management, MTS - Management Technologique et Strategique - Grenoble Ecole de Management); Gérald Piat (EDF R&D - EDF, createam - EDF R&D)
    Abstract: While scientists are stepping up their efforts to develop new technologies, the ability of firms to determine the value of their technologies by identifying potential applications has become a major challenge. This article focuses on a particular phase of technology development: the emergence phase. When a promising new technology first sees the light of day in a fundamental research laboratory, its target markets often seem plentiful but are ill-defined. The inability to produce prototypes or to identify potential users makes it difficult to explore potential commercial applications. On the basis of four micro-nanotechnologies case-studies conducted within a multi-partner innovation project, this article aims to theoretically explain why the identification of applications from emerging technologies is not a trivial problem. That research analyses how technologists and non-experts interact during creative investigations on new applications. It shows that the technologists are victims of a form of cognitive fixation effect. Indeed, their beliefs and activities are guided by a stable cognitive representation of their technology: the presumed identity of technology. Based on a recent design framework, C-K Design Theory, the technological exploration process followed in our four case-studies is modeled and mechanisms to dismantle the presumed identity and to design an extended identity of technology are provided.
    Keywords: management of emerging technology; technological exploration; identity of technology; C-K Design Theory, presumed identity; technology-push; technological innovation
    Date: 2011–11–16
  4. By: Gustav Ranis (Economic Growth Center, Yale University); Mallory Irons (Johns Hopkins University); Yanjing Huang (Yale University)
    Abstract: There is little doubt that technology change, both in terms of its process and quality dimensions, represents the principal driving force to explain comparative economic performance at both micro and macro levels. This paper examines the sources of technology change and the impediments to the full realization of its opportunities, both abstractly and in the context of a comparison among six typologically diverse developing countries. Among the external sources, we examine the roles of trade, foreign patents and FDI; among the internal sources we examine the roles of investment, domestic R&D, domestic patents, S&T personnel and secondary education alternatives. Among impediments, we analyze certain public and private policy frameworks which tend to impede the realization of technological opportunities. We detect some reasons for the better TFP performance of the East Asian in comparison with the Latin American countries.
    Keywords: Development, Technological Change
    JEL: O11 O14 O33
    Date: 2011–09
  5. By: Kato, Naonori; Nogawa, Hiroki; Ueda, Masahi
    Abstract: Japanese copyright law consists of two parts. One has to do with the rights of the content holder. The other is concerned with limitations to the rights of the content holder, such as compensation for private sound and visual recording; that is, charges for copying media where it is difficult to charge individually, as is the case with Digital Rights Management (DRM ). Such compensation permits the holders of the content to collect royalties through a special compensation arrangement. That is, the designated management associations impose the obligation for compensation on the manufacturers of recording devices. Despite the spread of such compensation arrangements, new challenges continue to arise, such the case of SARVH, the designated management association, brought against Toshiba, a manufacturer of DVD recorders. The Tokyo District Court ruled, 'Compensation is not required under copyright law, but just that all possible efforts be made.' It remains unclear whether holders of content can receive sufficient royalties or not. An analysis of the latest decision regarding digital content, from the point of copyright law, clarifies the relationship between DRM and compensation for private sound and visual recording. To accommodate stakeholders' requirements, a new regulation or structure for payment of royalties is proposed. --
    Keywords: copyritht law,DRM (Digital Rights Manegement),compensation,levy
    Date: 2011
  6. By: Andreas Haufler (University of Munich and CESifo); Pehr-Johan Norbaeck (Research Institute of Industrial Economics, Stockholm); Lars Persson (Research Institute of Industrial Economics, Stockholm and CEPR)
    Abstract: Many governments promote small businesses for the dual reasons of fostering `break-through' innovations and employment growth. In this paper we study the effects of tax and subsidy policies on entrepreneurs' choice of riskiness of an innovation project and on their mode of commercializing the innovation (market entry versus sale). Limited loss offset provisions in the tax system induce entrepreneurs to choose projects with too little risk and this problem arises primarily when entrepreneurs market their product themselves. When innovations reduce only the fixed costs of production this leads to a fundamental policy trade-off between the declared goals of promoting employment and innovation in small, entrepreneurial firms. When innovations reduce variable production costs, policies to promote small businesses may even be unambiguously harmful.
    JEL: H25 L13 M13 O31
    Date: 2011

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