nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2013‒02‒16
seven papers chosen by
Giovanni Ramello
Universita' Amedeo Avogadro

  1. Untangling Searchable and Experiential Quality Responses to Counterfeits By Yi Qian; Qiang Gong; Yuxin Chen
  2. Empirical Implications of Sequential Innovation and Legal Action By Arai, Yasuhiro; Moriya, Fumitoshi
  3. The Effects of Patent Protection: A Growth Model with Status Preference By Shiyuan Pan; Mengbo Zhang; Heng-fu Zou
  4. Localized knowledge spillovers and patent citations: A distance-based approach (revised version) By Yasusada Murata; Ryo Nakajima; Ryosuke Okamoto; Ryuichi Tamura
  5. European antitrust control and standard setting By Mario Mariniello
  6. Standard-setting abuse: the case for antitrust control By Mario Mariniello
  7. Free and open source software underpinning the european forest data centre By Rodriguez Aseretto, Dario; Di Leo, Margherita; de Rigo, Daniele; Corti, Paolo; McInerney, Daniel; Camia, Andrea; San-Miguel-Ayanz, Jesús

  1. By: Yi Qian; Qiang Gong; Yuxin Chen
    Abstract: In this paper, we untangle the searchable and experiential dimensions of quality responses to entry by counterfeiters in emerging markets with weak intellectual property rights. Our theoretical framework analyzes the market equilibria under competition with non-deceptive counterfeiting and deceptive counterfeiting, respectively, as well as under monopoly branding. A key theoretical prediction is that emerging markets can be self-corrective with respect to counterfeiting issues in the following sense: First, counterfeiters could earn positive profits by pooling with authentic brands only when consumers have good faith in the market (believe in a low probability that any product is a counterfeit). When the proportion of counterfeits in the market exceeds a cutoff value, brands would invest in self-differentiation from the competitive fringe counterfeiters. Second, to attain a separating equilibrium with counterfeiters, branded incumbents upgrade the searchable quality (e.g. appearance) of their products more and improve the experiential quality (e.g. functionality) less, as compared to monopoly equilibrium. This prediction uncovers the nature of product differentiation in the searchable dimension and helps in analyzing the real-world innovation strategies employed by authentic firms in response to entries by counterfeit entities. In addition, the welfare analyses hint at a non-linear relationship between social welfare and intellectual property enforcement.
    JEL: K42 O31 O34
    Date: 2013–02
  2. By: Arai, Yasuhiro; Moriya, Fumitoshi
    Abstract: This article compares two hypotheses, sequential innovation and legal action, and theoretically obtains the testable implications to specify which hypothesis is crucial in empirical evidence. Our main results are that we distinguish between the two hypotheses based on i) whether the cross-term coefficient of the number of patents and the dummy of patent law are positive or negative and ii) whether the variance of the patent distribution is decreased.
    Keywords: Intellectual Property Rights, Sequential Innovation, Multitask
    JEL: D42 K39 L86
    Date: 2013–02
  3. By: Shiyuan Pan (Center for Research of Private Economy and School of Economics, Zhejiang University); Mengbo Zhang (School of Economics, Zhejiang University); Heng-fu Zou (Central University of Finance and Economics, CEMA)
    Abstract: We build a growth model with status preference to explore the effects of patent protection on innovation, inequality and social welfare. The main results are as follows. There is a non-monotonic relationship between patent protection and innovation. In addition, the effect of patent protection on social welfare is non-monotonic when the strength of status preference is small, whereas patent protection lowers social welfare when the strength of status preference is large. Finally, strengthening patent protection enlarges wealth inequality when agents have different time and status preferences.
    Keywords: Patent Protection, Status Preference, Innovation, Inequality, Social Welfare
    JEL: O31 O34 O40
    Date: 2013
  4. By: Yasusada Murata (Advanced Research Institute for the Sciences and Humanities, Nihon University); Ryo Nakajima (Department of Economics, Keio University); Ryosuke Okamoto (National Graduate Institute for Policy Studies); Ryuichi Tamura (Center for Economic Growth Strategy, Yokohama National University)
    Abstract: We develop a new distance-based test of localized knowledge spillovers that embeds the concept of control patents. Using microgeographic data, we identify localization distance for each technology class while allowing for spillovers across geographic units. We revisit the debate by Thompson and Fox-Kean (2005a,b) and Henderson, Jaffe and Trajtenberg (2005) on the existence of localized knowledge spillovers, and find solid evidence supporting localization even when using fine-grained controls. We further relax the assumption of perfect controls, and show that our distance-based test detects localization for the majority of technology classes unless hidden biases induced by imperfect controls are extremely large.
    Date: 2013–01
  5. By: Mario Mariniello
    Abstract: Standards reduce production costs and increase productsâ?? value to consumers. Standards however entail risks of anti-competitive abuse. After the adoption of a standard, the chosen technology normally lacks credible substitutes. The owner of the patented technology might thus have additional market power relative to locked-in licensees, and might exploit this power to charge higher access rates. In the economic literature this phenomenon is referred to as â??hold-upâ??. To reduce the risk of hold-up, standard-setting organisations often require patent holders to disclose their standard-essential patents before the adoption of the standard and to commit to license on fair, reasonable and non-discriminatory (FRAND) terms. The European Commission normally investigates unfair pricing abuse in a standard-setting context if a patent holder who committed to FRAND ex-ante is suspected not to abide to it ex-post. However, this approach risks ignoring a number of potential abuses which are likely harmful for welfare. That can happen if, for example, ex-post a licensee is able to impose excessively low access rates (â??reverse hold-upâ??) or if a patent holder acquires additional market power thanks to the standard but its essential patents are not encumbered by FRAND commitments, for instance because the patent holder did not directly participate to the standard setting process and was therefore not required by the standard-setting organisations to commit to FRAND ex-ante. A consistent policy by the Commission capable of tackling all sources of harm should be enforced regardless of whether FRAND commitments are given. Antitrust enforcement should hinge on the identification of a distortion in the bargaining process around technology access prices, which is determined by the adoption of the standard and is not attributable to pro-competitive merits of any of the involved players.
    Date: 2013–02
  6. By: Mario Mariniello
    Abstract: Standards reduce production costs and increase the value of products to consumers; ultimately they significantly contribute to economic development. Standards however entail risks of anti-competitive abuse. After the adoption of a standard, the elimination of competition between technologies can lead to consumer harm. Fair, reasonable, nondiscriminatory (FRAND) commitments made by patent holders have been used to mitigate that risk. The European Commission recognises the importance of standards, but European Union competition policy is still seeking to identify well-targeted and efficient enforcement rules.
    Date: 2013–02
  7. By: Rodriguez Aseretto, Dario; Di Leo, Margherita; de Rigo, Daniele; Corti, Paolo; McInerney, Daniel; Camia, Andrea; San-Miguel-Ayanz, Jesús
    Abstract: Excerpt: Worldwide, governments are growingly focusing on free and open source software (FOSS) as a move toward transparency and the freedom to run, copy, study, change and improve the software. The European Commission (EC) is also supporting the development of FOSS [...]. In addition to the financial savings, FOSS contributes to scientific knowledge freedom in computational science (CS) and is increasingly rewarded in the science-policy interface within the emerging paradigm of open science. Since complex computational science applications may be affected by software uncertainty, FOSS may help to mitigate part of the impact of software errors by CS community- driven open review, correction and evolution of scientific code. The continental scale of EC science-based policy support implies wide networks of scientific collaboration. Thematic information systems also may benefit from this approach within reproducible integrated modelling. This is supported by the EC strategy on FOSS: "for the development of new information systems, where deployment is foreseen by parties outside of the EC infrastructure, [F]OSS will be the preferred choice and in any case used whenever possible". The aim of this contribution is to highlight how a continental scale information system may exploit and integrate FOSS technologies within the transdisciplinary research underpinning such a complex system. A European example is discussed where FOSS innervates both the structure of the information system itself and the inherent transdisciplinary research for modelling the data and information which constitute the system content. [...]
    Keywords: European Forest Data Centre; EFDAC; free software; Free Scientific Software; Free and Open Source Software; Europe; forest information system; European Forest Fire Information System; EFFIS; geospatial; geospatial tools; semantic array programming; morphological spatial pattern analysis; GUIDOS; reproducible research; environmental modelling
    JEL: Q23 C6 Q51 Q54 Q57 C44 C31 L86 C8
    Date: 2013

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