nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2014‒11‒01
four papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  2. How Do Open Standards Influence Inventive Activity? Evidence from the IETF By Wen Wen; Chris Forman; Sirkka Jarvenpaa
  3. Publisher's Announcements and Piracy-Monitoring Devices in Software Adoption By Eric Darmon; Alexandra Rufini; Dominique Torre

  1. By: Nikolas J. Zolas
    Abstract: This paper analyzes how firms decide where to patent in a heterogeneous firm model of trade with endogenous rival entry. In the model, innovating firms compete with rival firms on price, where rivals force the innovating firm to reduce markups and lower the innovating firm's probability of obtaining monopolistic profits. Patenting allows the innovating firm to reduce the number of rival rms by increasing their fixed overhead costs, thereby providing higher expected profits and increased markups from reduced competition. Countries with higher states of technology, more competition and better patent protection have a greater proportion of entrants who patent. Industries tend to follow a U-shaped pattern of patenting where industries with high heterogeneity in production and low substitution, along with industries with low heterogeneity in production and high substitution patent more frequently. Using a generalized framework of the model, I estimate market-based measures of country-level patent protection, which when compared with other IP indices, suggests that not enough international patenting is taking place. Finally, I test the predictions of the model using a newly available technology-to-industry concordance on bilateral patent flows and show that firms are increasingly sensitive to foreign IP protection. Countries that choose to maximize their IP protection can increase the number of foreign patents by almost 10%.
    Keywords: Patents, international trade, heterogeneous rms, endogenous markups, intellectual property, imperfect competition
    JEL: F12 F29 O34 L11
    Date: 2014–09
  2. By: Wen Wen (McCombs School of Business, The University of Texas at Austin, 2110 Speedway Stop B6500, Austin, TX 78712); Chris Forman (Scheller College of Business, Georgia Institute of Technology, 800 West Peachtree Street NW, Atlanta, GA 30308); Sirkka Jarvenpaa (McCombs School of Business, The University of Texas at Austin, 2110 Speedway Stop B6500, Austin, TX 78712)
    Abstract: We examine how standardization in the information and communication technologies affects the inventive activities of firms that do not contribute standards but potentially produce to the standards. In the context of the Internet Engineering Task Force, we find that as a technological area releases 100 more open standards contributed by commercial firms, non-contributing firms have 18%-20% less inventive output in the same technological area. This negative effect of standardization in a technological area is stronger when the standards-contributing firms hold a large fraction of complementary intellectual property rights (IPR) in the area, but is somewhat lessened when the ownership of complementary IPR is highly concentrated among these contributing firms. These effects are also stronger (more negative) on the inventive activity of small firms. In contrast, we find that increases in the number of standards developed solely by academics and others associated with noncommercial entities are positively associated with inventive activity.
    Keywords: standardization; inventive activity; innovation; intellectual property rights
    JEL: L15 L86 O34
    Date: 2014–10
  3. By: Eric Darmon (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Alexandra Rufini (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)); Dominique Torre (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS))
    Abstract: In this paper, we investigate the distribution strategy of a software publisher. The user adoption context is characterized by uncertainty about quality (experience good) and heterogeneous piracy costs. Users can purchase or get unauthorized/illegal copies (digital piracy) of the software during two periods (or not adopt at all). Between these two periods, users can acquire information through word-of-mouth. To maximize profit, the publisher needs to decide about price, quality and level of monitoring of piracy. We show that the software publisher can profit from accommodation a certain level of piracy of the product. We add to the literature by explicitly considering the opportunity for the publisher to cheat about future price and monitoring levels (misleading announcements). This strategy that is falsely permissive towards piracy, can sometimes appear more profitable. However, when the degree of sophistication of user expectations about the publisher's strategy increases, only a strategy that is permissive (with respect to piracy) with non misleading announcements remains robust.
    Keywords: software distribution strategy ; piracy ; experience good ; misleading announcements
    Date: 2014
  4. By: Adhi Baskara Ekananda (University of Indonesia, Indonesia)
    Abstract: Cause-related marketing (CRM) has been applied by various brands, both in enhancing consumers’ perception of the brand social concern, and to generate more sales. There are two delivery patterns for CRM: conventional and social alliance (Liu and Ko, 2010). The conventional pattern is done by the company exclusively. Meanwhile, in the social alliance pattern, marketer creates a partnership with a non-profit organization. Although the main aim of CRM is to improve the corporate image, it was proven that company can increase its profit by applying CRM (Krishna and Rajan, 2009). CRM focuses on a distinct cause that can be related to the corporation or their product. The distinctiveness can be established by considering the cause-brand fit (Bigne-Alcaniz et al., 2012; Myers et al., 2012). The CRM program that tied to a particular brand is possible to strengthen the brand social image. The main purpose of this working paper is to examine consumer willingness to participate in the marketer’s CRM program based on the partner-fit and the cause-brand fit. The study will manipulate four conditions in applying CRM program, which employing experiment approach. The design of study will be 2 (partner: brand-partner fit vs. brand-partner not fit) X 2 (cause: product-related vs. non product-related) between subject. The expected practical contribution from this working paper is to offer alternative considerations for applying CRM program that will give a stronger preference from consumer.
    Date: 2013–09

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