nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2015‒11‒07
nine papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. How Do Patents Affect Follow-On Innovation? Evidence from the Human Genome By Bhaven Sampat; Heidi L. Williams
  2. Patent Assertions: Are We Any Closer to Aligning Reward to Contribution? By Fiona Scott Morton; Carl Shapiro
  3. Opportunities to profit under competitive market conditions: The case of the Macedonian wineries By Georgiev, Nenad; Gjosevski, Dragon; Simonovska, Ana; Nacka, Marina
  4. Intellectual property rights and developing countries: The north-south-east model By Caner Demir; Aykut Lenger
  5. Welfare Effects of Protected Geographical Indications By Mehmet Tarakcıoğlu
  6. International intellectual property rights protection and economic growth with costly transfer By Kazuyoshi Ohki
  7. Innovation and IPRs for Agricultural Crop Varieties as Intermediate Goods By Eaton, Derek
  8. Foreign IPR, Trade and Innovation: Does complexity matter? By José Fernández Donoso
  9. Streaming Reaches Flood Stage: Does Spotify Stimulate or Depress Music Sales? By Luis Aguiar; Joel Waldfogel

  1. By: Bhaven Sampat; Heidi L. Williams
    Abstract: We investigate whether patents on human genes have affected follow-on scientific research and product development. Using administrative data on successful and unsuccessful patent applications submitted to the US Patent and Trademark Office, we link the exact gene sequences claimed in each application with data measuring follow-on scientific research and commercial investments. Using this data, we document novel evidence of selection into patenting: patented genes appear more valuable — prior to being patented — than non-patented genes. This evidence of selection motivates two quasi-experimental approaches, both of which suggest that on average gene patents have had no effect on follow-on innovation.
    JEL: I10 I18 O34
    Date: 2015–10
  2. By: Fiona Scott Morton; Carl Shapiro
    Abstract: The 2011 America Invents Act was the most significant reform to the United States patent system in over fifty years. However, the AIA did not address a number of major problems associated with patent litigation in the United States. In this paper, we provide an economic analysis of post-AIA developments relating to Patent Assertion Entities (PAEs) and Standard-Essential Patents (SEPs). For PAEs and SEPs, we examine the alignment, or lack of alignment, between the rewards provided to patent holders and their social contributions. Our report is mixed. Regarding PAEs, we see significantly improved alignment between rewards and contributions, largely due to a series of rulings by the Supreme Court. Legislation currently under consideration in Congress would further limit certain litigation tactics used by PAEs that generate rewards unrelated to contribution. We also see some notable developments relating to SEPs, especially with the recent reform to the patent policies of the IEEE, a leading Standard-Setting Organization (SSO) and with several recent court decisions clarifying what constitutes a Fair, Reasonable and Non-Discriminatory (FRAND) royalty rate. However, other steps that could better align rewards with contributions on the SEP front have largely stalled out, particularly because other major SSOs do not seem poised to follow the lead of the IEEE. Antitrust enforcement in this area could further improve the alignment of rewards and contributions.
    JEL: K21 L0
    Date: 2015–10
  3. By: Georgiev, Nenad; Gjosevski, Dragon; Simonovska, Ana; Nacka, Marina
    Abstract: Building a recognizable brand for the Macedonian wine and higher values in intellectual property assets is the core for strengthening the wineries’ international market position. This paper attempts to identify Macedonian wineries’ opportunities to profit under competitive market conditions. Therefore, we first interpret evidence on determinants of their profitability, then we present their commitment towards intellectual property rights, and finally we describe a successful case of a winery that has a recognized brand internationally. The results indicated that wineries are not attractive investments if intensive marketing strategies in creation of strong brand equity are not strongly supported. The use of innovations, creativity and protection of intellectual property rights, could be successful strategy in increasing the opportunities to profit. The defined winery as distinctive case may be used as a guideline to reinforce wineries’ possibilities to follow future market signals, while struggling to adjust to the imposed market oriented production.
    Keywords: profitability strategy, marketing strategy, intellectual property rights, brand equity, competitive position., Marketing, Q13,
    Date: 2015
  4. By: Caner Demir (Ege University, Department of Economics); Aykut Lenger (Ege University, Department of Economics)
    Abstract: This study examines the effects of intellectual property protection on developing countries by using a three-pole global economy model. Although the classical North-South framework is a very useful method to represent the conflict between the developed and the developing world, the present study claims that it does not exactly reflect the heterogeneity within developing countries in some cases; such as intellectual property and technological production. Therefore, a three-pole world economy which consists of the following regions has been designed in this study; a region that only innovates high-technology goods (the North), a region that innovates low-technology goods and imitates northern high-technology goods (the East) and a region that only imitates eastern low-technology goods and northern high-technology goods that have been already imitated by eastern imitators (the South). This setup enables us to define the global imitation process as a chain system which allows southern region to imitate also the northern goods that have been imitated by eastern imitators before.To observe the effects of the possible policy choices, the theoretical model has been simulated. The results reveal firstly, northern region benefits from tighter intellectual property protection in any case; secondly, stronger IPR protections in the East reduces eastern imitation and enhances southern imitation sectors which target eastern imitation; thirdly, an IPR strengthening policy in the South certainly exerts negative effects in southern region while it brings benefit to eastern region in some aspects; e.g. relative wages. Particularly the third finding shows that the new three-pole approach on the analysis of intellectual property protection explicitly reflects the presence of an absolute conflict of interests within the developing world. Moreover, it proves that for developing countries with relatively low technological capacity there is no possibility of benefiting from tighter protection of the local intellectual property rights.
    Keywords: Intellectual Property Rights, Imitation, Innovation
    JEL: O34 O39 O19
    Date: 2015
  5. By: Mehmet Tarakcıoğlu (Frankfurt am Main, Germany)
    Abstract: The recent developing interest in Geographical Indications (GIs) products are mostly related to the changes in consumer demand and governmental agricultural policy in response to rising income, increasing globalization of food supply chain which also stipulates increasing concerns about food quality and safety issues with a diverse agricultural market structures across countries. But, this rising trend observed presents a significant challenge in the trade of food products that are considered to be inherently linked to, or determined by, the nature of the geographic environment in which production takes place (e.g., climate conditions, soil composition, local knowledge, etc.). Hence, asymmetric information characterizes these markets in which the producers know more about the quality of the products than consumers and product quality attributes are unknown until after consumption, or never revealed. Whereas the trade origin of goods in private domain can be indicated by a trademark, agricultural and food products are considered to need a proof of reputation for quality and safety features in addition to their trade origin. Therefore, geographical origin which is in public domain and descriptive in nature is used to help differentiate the products among similar goods by communicating the specific qualities associated. As a result of functions they play, the geographical indications have gained recognition as a distinct form of trade related intellectual property rights. These products have one important feature in common as availability of a specific link between the place of production and the product’s quality, characteristics, or reputation and this quality-origin nexus is established through legal protection under different national jurisdictions with a global framework of the Agreement on Trade Related Intellectual Property Rights (TRIPS). Notwithstanding to the different prevailing approaches of either European Union (EU)-led sui generis or United States (US)-led trade mark based system of legal protection that is also a subject of discussions in the Transatlantic Trade and Investment Partnership (TTIP) negotiations, GIs systems are generally introduced with an origin labelling and associated quality control as a means against the above mentioned quality uncertainty in the markets. The welfare implications of GIs for consumers and producers are mainly dependent upon the impact of the extent of the geographical differentiation on consumer demand as well as the structure of related markets. A broad literature on GIs has focused on consumers’ attitudes, perceptions for and price premiums of GI labelled products. Most of the existent studies investigates the price effects of GIs which have also impact on the other parts of supply chain. The results of a meta-analysis of studies analysing the effects of GIs/origin show that studies focus on price impacts and many use hedonic approaches to give the implicit prices for GI label/distinct product origins or apply contingent valuation and other choice modelling techniques to indicate the willingness-to-pay measures. There are also few theoretical modelling studies which derive the impact of GIs, especially dynamics of transition. Other meta-analyses also show that the price impact is a key variable in empirical analyses and that the price premium consumers are willing to pay for GIs is often used as an indicator. But, extensive analytical works on implications of GIs on different parts of the related supply chain are lacking and the existing studies draw different conclusions about welfare implications of GIs with different modelling approaches and findings. Accordingly, it is the objective of this study to provide an analytical framework for the analysis of the GIs labelling program. A methodological approach is developed by combining an equilibrium displacement modelling framework and contingent valuation methodology to provide a measurement of GIs program impact in the defined market structure. The equilibrium displacement model of a possible market structure for GIs products is developed to identify the way in which the introduction of GIs labelling with quality control will affect the prices and quantities of GIs and mass products in the related markets. The model is developed for a segmented market with differential qualities and quality control which extends the previous literature by including the factor markets in such a multi-stage structure, which is consistent with the market structure of GIs products mostly being processed foods. The framework developed also offers the use of contingent valuation based choice experiment methodology to measure a possible changes in consumer demand in response to the introduction of GIs labelling. The framework developed in this study can be applied to estimating the impacts of a variety of GIs based labelling program as well as governmental promotion and support programs as implemented at regional or national level.
    Keywords: Geographical Indications, Labelling, Equilibrium Displacement Model, Welfare Analysis
    JEL: O34 Q12 Q13 Q17 Q1
    Date: 2015
  6. By: Kazuyoshi Ohki (Graduate school of economics, Osaka University)
    Abstract: This paper develops a product-cycle model with costly technology transfer, which requires re- sources from both the North and the South. In the basic model , we show that strengthening IPR protection induces a large technology transfer and narrows the North-South wage gap. However, we obtain an ambiguous result regarding the effect on economic growth, which depends crucially on the size of the transfer cost. Although strengthening IPR protection induces a high growth rate when the transfer cost is small, it can induce a low growth rate when the transfer cost is large. In the extended model, in order to examine what factors determine the transfer cost, we consider the situation where the Southern firms may misbehave and the Northern firms incur a cost to monitor them. We show that the degree of investor protection and the degree of morality in developing countries influence the size of the transfer cost, which affects economic growth.
    Keywords: R&D, product-cycle model, technology transfer, IPR protection
    JEL: F12 F23 F43 O31 O34
    Date: 2015–10
  7. By: Eaton, Derek
    Abstract: This paper analyzes the effects of varying appropriability or strength of IPRs for agricultural seeds. The paper is motivated by the agricultural sector in which an innovator uses genetic resources to produce new crop varieties to be marketed to a farm sector that exhibits heterogeneity in its ability to profit from the innovation. Farmers are modelled as heterogeneous producers, purchasing seed from an innovating monopolist in a vertical product differentiation framework. The effects of IPRs on innovation are endogenized and the welfare of consumers assessed through the price for food. The theoretical analysis reveals some novel aspects of the traditional innovation versus diffusion tradeoff. Less productive producers, and also consumers, are better off with a moderate level of appropriability and lower level of innovation. The model is extended to a two country setting consisting of North and South.
    Keywords: innovation, intellectual property, product differentiation, trade, Crop Production/Industries, Q16, L13, F12,
    Date: 2015
  8. By: José Fernández Donoso (School of Business and Economics, Universidad del Desarrollo)
    Abstract: This paper studies the relation between foreign intellectual property rights affect exporting firms' productivity when industries have different technological complexity. Using simple functional forms, the dynamic model derives endogenous steady state distributions of exporting firms' productivity. Numerical simulations show a non-monotonic effect of complexity on productivity, and a positive effect of IPR. Empirical evidence using labor productivity measures support the findings of the theoretical model
    Keywords: Export-led growth, Intellectual Property Rights, Imitation, Patents, Productivity
    Date: 2015–10
  9. By: Luis Aguiar (European Commission - JRC - IPTS); Joel Waldfogel (University of Minnesota - Carlson School of Management)
    Abstract: Streaming music services have exploded in popularity in the past few years, variously raising optimism and concern about their impacts on recorded music revenue. On the one hand, streaming services allow sellers to engage in bundling with the promise of increasing revenues, pro_ts, and consumer surplus. Successful bundling would indeed translate some of the interest in music not generating revenue through individual track sales - unpaid consumption and deadweight loss - into willingness to pay for the bundled o_ering. On the other hand, streaming may displace traditional individual track sales. Even if they displace sales, streams may however still raise overall revenue if the streaming payment is large enough in relation to the extent of sales displacement. We make use of the growth in Spotify use during the years 2013-2015 to measure its impact on unpaid consumption and on the sales of recorded music. We find that Spotify use displaces permanent downloads. In particular, 137 Spotify streams appear to reduce track sales by 1 unit. Consistent with the existing literature, our analysis also shows that Spotify displaces music piracy. Given the current industry's revenue from track sales ($0.82 per sale) and the average payment received per stream ($0.007 per stream), our sales displacement estimates show that the losses from displaced sales are roughly outweighed by the gains in streaming revenue. In other words, our analysis shows that interactive streaming appears to be revenue-neutral for the recorded music industry.
    Keywords: Music Streaming, Music Industry, Copyright
    JEL: K42 L82 O34 O38
    Date: 2015–05

This nep-ipr issue is ©2015 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.
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