nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2014‒04‒29
three papers chosen by
Giovanni Ramello
Universita' del Piemonte Orientale Amedeo Avogadro

  1. Patents as quality signals? The implications for financing constraints on R&D By Czarnitzki, Dirk; Hall, Bronwyn H.; Hottenrott, Hanna
  2. Does R&D increase the profit contribution of intangible assets? An exploration of European and American automotive supplierss By Stefan Lutz
  3. Property in Print: Copyright Law and the American Magazine Industry By Haveman, Heather A.; Kluttz, Daniel N.

  1. By: Czarnitzki, Dirk; Hall, Bronwyn H.; Hottenrott, Hanna
    Abstract: Information about the success of a new technology is usually held asymmetrically between the research and development (R&D)-performing firm and potential lenders and investors. This raises the cost of capital for financing R&D externally, resulting in financing constraints on R&D especially for firms with limited internal resources. Previous literature provided evidence for start-up firms on the role of patents as signals to investors, in particular to Venture Capitalists. This study adds to previous insights by studying the effects of firms' patenting activity on the degree of financing constraints on R&D for a panel of established firms. The results show that patents do indeed attenuate financing constraints for small firms where information asymmetries may be particularly high and collateral value is low. Larger firms are not only less subject to financing constraints, but also do not seem to benefit from a patent quality signal. --
    Keywords: Patents,Quality Signal,Research and Development,Financial Constraints,Innovation Policy
    JEL: O31 O32 O38
    Date: 2014
  2. By: Stefan Lutz (Royal Docks Business School, University of East London)
    Abstract: Economic theory implies that research and development (R&D) efforts increase firm productivity and ultimately profits. In particular, R&D expenses lead to the development of intangible assets in the form of intellectual property (IP) and these assets command a return that increases overall profits of the firm. This hypothesis is investigated for the North American and European automotive supplier industries. Results indicate that R&D expenses in fact increase both intangible asset levels and their profit contributions. In particular, increases in the R&D expense to sales ratio lead to increases in the profit contribution of intangible assets relative to sales. This indicates that more R&D intensive IP should command higher royalty rates per sales when licensed to third parties and within multinational enterprises alike.
    Keywords: Productivity; Intellectual property; Royalties; MNE; Transfer pricing.
    JEL: D24 L20 L62 M21
    Date: 2014–02
  3. By: Haveman, Heather A.; Kluttz, Daniel N.
    Abstract: We study copyright law and its relationship with cultural conceptions of authorship and technicalconstraints on the economics of publishing in the US. Because American copyright law was first developed in the eighteenth and nineteenth centuries, we focus on that time period. And because magazines were the primary forum for literary expression in America during this time, we study the magazine industry. Both technical and cultural factors created opportunities for magazines and imposed constraints on them, but most effects of copyright law were mediated by cultural, not technical, factors. Lack of copyright protection for foreign authors allowed magazines reprint foreign authors’ work for free. However, copyright law was not used by magazines to protect domestic work: very few claimed copyright over the original material they published and none of those claims were adjudicated by courts. Therefore, magazines reprinted work from domestic sources, including other magazines. Nevertheless, copyright law had constitutive effects on the literary market: it spurred the emergence of a cultural conception of the author-as-paid-professional; in turn, this cultural shift fostered the market for literature, as magazines began to pay authors for their work and compete intensely over the work of the most popular authors.
    Keywords: Social and Behavioral Sciences
    Date: 2014–02–21

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