nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2014‒12‒08
seven papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Optimal Licensing for Public Intellectual Property: Theory and Application to Plant Variety Patents By Alston, Julian; Plakias, Zoe T.
  2. Foreign and Native-Born STEM Graduates and Innovation Intensity in the United States By Winters, John V.
  3. The doctrines and the making of an early patent system in the developing world: the Chilean case. 1840s-1910s By Bernardita Escobar
  4. Appropriability Mechanisms, Innovation and Productivity: Evidence from the UK By Bronwyn H. Hall; Vania Sena
  5. Does too much work hamper innovation? Evidence for diminishing returns of work hours for patent grants By Celbis M.G.; Turkeli S.
  6. Starving (or Fattening) the Golden Goose?: Generic Entry and the Incentives for Early-Stage Pharmaceutical Innovation By Lee Branstetter; Chirantan Chatterjee; Matthew J. Higgins
  7. Determinants of pharmaceutical innovation diffusion: social contagion and prescribing characteristics By Lublóy, Ágnes; Keresztúri, Judit Lilla; Benedek, Gábor

  1. By: Alston, Julian; Plakias, Zoe T.
    Abstract: In the United States, public universities may choose to license a plant variety to a limited number of producers (an exclusive license) or to an unlimited number of producers (an open license). This choice has implications for the quantity and distribution of total benefits from the variety. Universities have traditionally released new apple varieties under open licenses, but several universities have now begun exploring or implementing exclusive licensing. In this paper, we consider the choice faced by a public university when licensing a plant variety patent, with a focus on apples. Our work differs from the majority of past studies on patent licensing because we allow licensees to determine the signal of product quality through a trademark and we consider welfare objectives for a public university that differ from simple maximization of patent income. In this context, we compare monopoly licensing and two oligopoly licensing scenarios. We then solve for the optimal choice of licensing fees for the university. Using numerical simulations, we find that consumer surplus and social welfare may be higher under exclusive licensing if consumers are relatively responsive to expenditure on the trademark but relatively insensitive to price. However, exclusive licenses may create distributional concerns among producers. Furthermore, different objective functions of the university can imply different optimal outcomes for both the number of licensees and the licensing fees. Although we focus on apples, this model and its results could apply in a variety of settings.
    Keywords: intellectual property, patents, trademarks, public research, plant breeding, plant varieties, Agricultural and Food Policy, Industrial Organization, Marketing, Research and Development/Tech Change/Emerging Technologies,
    Date: 2014–05
  2. By: Winters, John V. (Oklahoma State University)
    Abstract: This paper examines the effects of foreign- and native-born STEM graduates and non-STEM graduates on patent intensity in U.S. metropolitan areas. I find that both native and foreign-born STEM graduates significantly increase metropolitan area patent intensity, but college graduates in non-STEM fields have a smaller and statistically insignificant effect on patenting. These findings hold for both cross-sectional OLS and 2SLS regressions. I also use time-differenced 2SLS regressions to estimate the effects of STEM-driven increases in native and foreign college graduate shares and again find that both native and foreign STEM graduates have statistically significant and economically large effects on innovation. Together these results suggest that policies that increase the stocks of both foreign and native STEM graduates increase innovation and provide considerable economic benefits to regions and nations.
    Keywords: STEM, innovation, patents, human capital, higher education
    JEL: I25 J24 J61 O31 R12
    Date: 2014–10
  3. By: Bernardita Escobar (Facultad de Economía y Empresa, Universidad Diego Portales)
    Abstract: This article analyses the creation of the first Chilean patent law (1840s-1920s), by examining the underlying doctrines and key actors (political and business people) in the making of one of the earliest patent systems in Latin America and the developing world. From three main doctrines supporting IP protection (natural rights, contractarian and utilitarian) the article identifies elements of the first, disregard for the second and some traits of the third doctrine in the law. Protection of „introductions‟, a non-contemporary IP subject matter, resulted from the mix of utilitarian and protectionist beliefs of policy makers, the influence of colonial regulation and a series of petitions for privileges made between 1830-40.
    Date: 2014–09
  4. By: Bronwyn H. Hall; Vania Sena
    Abstract: We use an extended version of the well-established Crepon, Duguet and Mairesse model (1998) to model the relationship between appropriability mechanisms, innovation and firm-level productivity. We enrich this model in several ways. First, we consider different types of innovation spending and study the differences in estimates when innovation spending (rather than R&D spending) is used to predict innovation in the CDM model. Second, we assume that a firm simultaneously innovates and chooses among different appropriability methods (formal or informal) to protect the innovation. Finally, in the third stage, we estimate the impact of the innovation output conditional on the choice of appropriability mechanisms on firms' productivity. We find that firms that innovate and rate formal methods for the protection of Intellectual Property (IP) highly are more productive than other firms, but that the same does not hold in the case of informal methods for the protection of a firm's IP, except possibly for large firms as opposed to SMEs. We also find that this result is strongest for firms in the services, trade, and utility sectors, and negative in the manufacturing sector.
    JEL: L25 O30 O34
    Date: 2014–09
  5. By: Celbis M.G.; Turkeli S. (UNU-MERIT)
    Abstract: This study suggests that individual time is an important factor that needs to be considered in innovation research. We define two types of time work time and free time. We find that work time has a positive but diminishing effect on innovative output such that after a certain point the innovation-enhancing role of work time is taken over by individual free time. Using a sample of OECD countries and Russia, we estimate a quadratic relationship between work time and per capita innovative output. For a hypothetical economy that has no other holidays but weekends, we estimate that individuals should not work more than about 6.6 hours a day for maximizing innovative output. We also present a categorization of countries based on their innovative output and work hours that may kindle interest for certain case-specific future research.
    Keywords: Labor Economics Policies; Time Allocation and Labor Supply; Technological Change; Research and Development; Intellectual Property Rights: General; Innovation and Invention: Processes and Incentives;
    JEL: O30 O31 J08 J22
    Date: 2014
  6. By: Lee Branstetter; Chirantan Chatterjee; Matthew J. Higgins
    Abstract: Over the last decade, generic penetration in the U.S. pharmaceutical market has increased substantially, providing significant gains in consumer surplus. What impact has this rise in generic penetration had on the rate and direction of early stage pharmaceutical innovation? We explore this question using novel data sources and an empirical framework that models the flow of early-stage pharmaceutical innovations as a function of generic penetration, scientific opportunity, firm innovative capability, and additional controls. While the aggregate level of early-stage drug development activity has increased, our estimates suggest a sizable, robust, negative relationship between generic penetration and early-stage pharmaceutical research activity within therapeutic markets. A 10% increase in generic penetration is associated with a 7.9% decline in all early-stage innovations in the same therapeutic market. When we restrict our sample to first-in-class pharmaceutical innovations, we find that a 10% increase in generic penetration is associated with a 4.6% decline in early-stage innovations in the same market. Our estimated effects appear to vary across therapeutic classes in sensible ways, reflecting the differing degrees of substitution between generics and branded drugs in treating different diseases. Finally, we are able to document that with increasing generic penetration, firms in our sample are shifting their R&D activity to more biologic-based (large-molecule) products rather than chemical-based (small-molecule) products. We conclude by discussing the potential implications of our results for long-run welfare, policy, and innovation.
    JEL: D2 L5 L51 L65 M2
    Date: 2014–09
  7. By: Lublóy, Ágnes; Keresztúri, Judit Lilla; Benedek, Gábor
    Abstract: This article studies the determinants of pharmaceutical innovation diffusion among specialists. To this end, it investigates the influences of six categories of factors—social embeddedness, socio-demography, scientific orientation, prescribing patterns, practice characteristics, and patient panel composition—on the use of new drugs for the treatment of type 2 diabetes mellitus in Hungary. Here, in line with international trends, 11 brands were introduced between April 2008 and April 2010, outperforming all other therapeutic classes. The Cox proportional hazards model identifies three determinants—social contagion (in the social embeddedness category) and prescribing portfolio and insulin prescribing ratio (in the prescribing pattern category). First, social contagion has a positive effect among geographically close colleagues—the higher the adoption ratio, the higher the likelihood of early adoption—but no influence among former classmates and scientific collaborators. Second, the wider the prescribing portfolio, the earlier the new drug uptake. Third, the lower the insulin prescribing ratio, the earlier the new drug uptake—physicians’ therapeutic convictions and patients’ socioeconomic statuses act as underlying influencers. However, this finding does not extend to opinion-leading physicians such as scientific leaders and hospital department and outpatient center managers. This article concludes by arguing that healthcare policy strategists and pharmaceutical companies may rely exclusively on practice location and prescription data to perfect interventions and optimize budgets.
    Keywords: Cox proportional hazards model, diffusion, pharmaceutical innovations, prescribing characteristics, social contagion
    JEL: C14 I19 O33
    Date: 2014–06–25

This nep-ipr issue is ©2014 by Giovanni Ramello. 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.