nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2012‒04‒03
five papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. How does obtaining intellectual property rights impact technology commercialization strategy? Reconciling the competing effects on licensing vs. financing By Simon Wakeman
  2. Strategic Foreign Direct Investment in Vertically Related Markets By ISHIKAWA Jota; HORIUCHI Eiji
  3. Implementation Cycles : Investment-Specific Technological Change and the Length of Patents By Rousakis, Michael
  4. “But Peter’s in it for the money” – the liminality of entrepreneurial scientists By Magnus Gulbrandsen
  5. The co-evolution of research institutes with universities and user needs: a historical perspective By Magnus Gulbrandsen

  1. By: Simon Wakeman (ESMT European School of Management and Technology)
    Abstract: The importance of obtaining intellectual property (IP) rights for commercializing innovation is well established. Separate streams of literature have shown a positive relationship between IP rights and both product licensing and third-party (especially VC) financing. However, since raising third-party finance enables an innovating firm to continue commercializing its innovation alone, product licensing and raising third-party finance may be considered substitutes and the impact of obtaining IP rights on commercialization mode is unclear. This paper attempts to reconcile these two competing effects of obtaining IP rights. The paper empirically examines the relationship between the status of the primary patent covering an innovation and whether the innovating firm’s licenses its innovation or raises external finance. The results show that patent filing significantly increases the likelihood of raising finance, while patent allowance has a positive effect on licensing. These results suggest that patent filings may act signals to financial investors but when it comes to licensing IP rights matter most as appropriability mechanisms.
    Keywords: intellectual property, licensing, financing, innovation, strategy
    Date: 2012–03–22
    Abstract: By using a simple North-South trade model with vertically related markets, this paper draws our attention to previously unidentified effects of foreign direct investment (FDI), namely that a North downstream firm affects the pricing behavior of an input supplier through technology spillovers and market integration led by FDI. Whether the North firm strategically undertakes FDI in the presence of technology spillovers depends on the South firm's capacity to absorb the North's technology. When capacity is not very high, the North firm could actually gain from technology spillovers to the South firm. FDI may benefit all producers and consumers. We also explore the South's policy measures to attract FDI. Our analysis suggests that the South's very tight intellectual property rights (IPR) protection may benefit neither side.
    Date: 2012–03
  3. By: Rousakis, Michael (University of Warwick)
    Abstract: This paper shows that implementation cycles, introduced in Shleifer (1986) , are possible in the presence of capital and the absence of borrowing constraints. In a two-sector economy, patents on cost-saving ideas which take the form of investment-specific technological change arrive exogenously at a sequential, perfectly smooth rate : in odd-numbered periods, they reach a firm producing capital of type 1 and, in the even-numbered ones, a firm producing capital of type. Firms can make profits out of these once. While the immediate appropriation (henceforth, "implementation") of patents is always a possibility, for accordingly formed expectations, firms can alternatively implement their patents simultaneously. This is because investment-specific technological change naturally introduces a one-period discrepancy between the time rms implement their patents and the time they receive revenue out of them. The implementation of a patent implies a sharp fall in investment which, in turn, causes a boom in current consumption. As a result, the consumption boom takes place before the wealth boom. This not only eliminates the need to smooth consumption away from the wealth boom to the period before it as conjectured, but, further, it implies that the interest rate paid when revenue is realized -and wealth expands- falls. Consequently, present discounted profits rise and implementation cycles can become a possibility. In a policy extension, I show that prolonging patent rights to two periods rules out "implementation cycles" and may lead to a welfare improvement. Key words: Implementation cycles ; capital ; savings ; monopoly ; demand externalities ; multiple equilibria ; patent rights JEL Classification: D42 ; D51 ; E21 ; E22 ; E32 ; O33 ; O34
    Date: 2012
  4. By: Magnus Gulbrandsen (Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: Entrepreneurial scientists who patent, start spin-off companies and commercialise in other ways are usually seen as occupying a dual role with one leg each in the academic world and another in the entrepreneurial world. This article instead argues that many entrepreneurial scientists should be considered liminal, i.e. at a boundary between these two worlds rather than inside both of them. In statements about research orientations, motivations for entering commercialisation, experiences, co-operation and more, many Norwegian entrepreneurial scientists create a certain distance to other faculty members and private entrepreneurs. The status of liminality or “in-between-ness” allows a flexible networking and commercialisation process. One the other hand, liminal entrepreneurial scientists seem to be locked out of many planning processes for initiatives like technology transfer offices in the wake of a recently changed legislation regarding ownership of research results in Norway.
    Date: 2012–03
  5. By: Magnus Gulbrandsen (Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: Many countries have a sector of research institutes that have been set up to promote industrial growth and help with users’ problem solving. Not formally part of the higher education sector, research institutes are significantly less understood and studied than universities. This paper and analyses the co-evolution of institutes and industry and the co-evolution of institutes and universities in Norway, using the framework of Whitley (2002, 2003). It is shown that there seems to be a dominant collaborative approach to developing innovative competences in Norway to which the institutes have had to adapt. Long traditions for external R&D collaboration in Norwegian industry and a structure of small low-tech firms have led to the establishment of a set of industry-specific institutes, a development reinforced by periods of isolation from industry perspectives at the universities. Alternative approaches to developing innovative competences have largely failed. Despite a low level of reputational competition in the public science system, research institutes have nevertheless contributed to increasing the level of intellectual pluralism and flexibility, creating opportunities for combinations of academic work and applied problem-solving. With weaker policy co-ordination and convergence in the funding criteria for all public science, there may be a risk that research in this system becomes more fragmented and isolated.
    Date: 2012–03

This nep-ipr issue is ©2012 by Roland Kirstein. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.