nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2017‒01‒29
eight papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Reversed Citations and the Localization of Knowledge Spillovers By Ashish Arora; Sharon Belenzon; Honggi Lee
  2. Prestige and Profit: The Royal Society of Arts and Incentives for Innovation, 1750-1850 By B. Zorina Khan
  3. Property, Possession and Knowledge By Ugo Pagano
  4. Screening for Patent Quality : Examination, Fees, and the Courts By Schankerman, Mark; Schütt, Florian
  5. Joint and Cross-border Patents as Proxies for International Technology Diffusion By Chia-Lin Chang; Michael McAleer; Ju-Ting Tang
  6. The Effects of Internet Book Piracy: The Case of Japanese Comics By Tatsuo Tanaka
  8. How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree By Fackler, Thomas A.; Nagler, Markus; Schnitzer, Monika; Watzinger, Martin

  1. By: Ashish Arora; Sharon Belenzon; Honggi Lee
    Abstract: Spillover of knowledge is considered to be an important cause of agglomeration of inventive activity. Many studies argue that knowledge spillovers are localized based on the observation that patents tend to cite nearby patents disproportionately. Specifically, patent citations are interpreted as mapping the transmission of knowledge from the cited invention to the citing invention. The localization of patent citations is therefore taken as evidence that such knowledge transmission is also localized. Localization of knowledge transmission, however, may not be the only reason for why patent citations are localized. Using a set of citations that are unlikely to be associated with knowledge transmission from the cited to the citing invention, we present evidence that challenges the view that localization of citations is driven by localized knowledge transmission. Though localized knowledge transmission may well exist, it is unlikely to be captured by patent citations
    JEL: O32 O34
    Date: 2017–01
  2. By: B. Zorina Khan
    Abstract: Debates have long centered around the relative merits of prizes and other incentives for technological innovation. Some economists have cited the experience of the prestigious Royal Society of Arts (RSA), which offered honorary and cash awards, as proof of the efficacy of innovation prizes. The Society initially was averse to patents and prohibited the award of prizes for patented inventions. This study examines data on several thousand of these inducement prizes, matched with patent records and biographical information about the applicants. The empirical analysis shows that inventors of items that were valuable in the marketplace typically chose to obtain patents and to bypass the prize system. Owing to such adverse selection, prizes were negatively related to subsequent areas of important technological discovery. The RSA ultimately became disillusioned with the prize system, which they recognized had done little to promote technological progress and industrialization. The Society acknowledged that its efforts had been “futile” because of its hostility to patents, and switched from offering inducement prizes towards lobbying for reforms to strengthen the patent system. The findings suggest some skepticism is warranted about claims regarding the role that elites and nonmarket-oriented institutions played in generating technological innovation and long-term economic development.
    JEL: D02 N13 O31 O33 O34 O43
    Date: 2017–01
  3. By: Ugo Pagano
    Abstract: As Hodgson has nicely pointed out, capitalism can be only understood if we accept that, unlike possession, property is a social construction and a relation among individuals. Unlike possession, property does not require a material thing on which it should be applied. Property rights can create fictitious commodities on intangible assets symbolizing the relationships among persons. The commoditization of knowledge and the emergence of contemporary intellectual monopoly capitalism must be understood in this framework. Knowledge is a non-rival good and its possession by others is not incompatible. Since we can all possess the same piece of knowledge, the so-called knowledge economy is often seen as place where capitalist relations should weaken. However this view confuses property with possession. In modern societies, intellectual property is becoming the most important part of capital. In spite of the non-rival possession of knowledge, intellectual property rights can be defined as the exclusive right to a piece of knowledge involving the corresponding restriction of others' liberties to use it. Modern intellectual monopoly capitalism is built on sophisticated property rights that should be not confused with any sort of primitive possession
    JEL: K11 K30 B15 B41
    Date: 2016–12
  4. By: Schankerman, Mark; Schütt, Florian (Tilburg University, TILEC)
    Abstract: We develop an integrated framework to study how governments can improve the quality of patent screening. We focus on four key policy instruments: patent office examination, pre- and post-grant fees, and challenges in the courts. We show that there are important complementarities among these instruments, and identify conditions under which they can be used to achieve either partial or complete screening. We simulate the model to study the welfare effects of different policy reforms. We show that intensifying patent office examination, frontloading patent fees and capping litigation costs all generate welfare gains, while replacing examination with a pure registration system reduces welfare.
    Keywords: innovation; patents; screening; litigation; courts; patent fees
    JEL: D82 K41 L24 O31 O34 O38
    Date: 2016
  5. By: Chia-Lin Chang (Department of Applied Economics Department of Finance National Chung Hsing University, Taiwan.); Michael McAleer; Ju-Ting Tang
    Abstract: With the advent of globalization, economic and financial interactions among countries have become widespread. Given technological advancements, the factors of production can no longer be considered to be just labor and capital. In the pursuit of economic growth, every country has sensibly invested in international cooperation, learning, innovation, technology diffusion and knowledge, and outward direct investment. In this paper, we use a panel data set of 40 countries from 1981 to 2008 and a negative binomial model, using a novel set of cross-border patents and joint patents as proxy variables for technology diffusion, in order to investigate such diffusion. The empirical results suggest that, if it is desired to shift from foreign to domestic technology, it is necessary to increase expenditure on R&D for business enterprises and higher education, exports and technology. If the focus is on increasing bilateral technology diffusion, it is necessary to increase expenditure on R&D for higher education and technology. It is also found that outward foreign direct investment has no significant impact on either joint or cross-border patents, whereas inward foreign direct investment has a significant negative impact on cross-border patents but no impact on joint patents. Moreover, government expenditure on higher education has a significant impact on both cross-border and joint patents.
    Keywords: International technology diffusion, Exports, Imports, Joint patent, Cross-border patent, R&D, Negative binomial panel data.
    JEL: F14 F21 O30 O57
    Date: 2016–12
  6. By: Tatsuo Tanaka (Faculty of Economics, Keio University)
    Abstract: In this study, the effects of internet book piracy in the case of the Japanese comic book market were examined using direct measurement of product level piracy ratio and a massive deletion project as a natural experiment. Panel regression and difference-in-difference analysis consistently indicated that the effect of piracy is heterogeneous: piracy decreased the legitimate sales of ongoing comics, whereas the legitimate sales of completed comics increased. The latter result is interpreted as follows: piracy reminds consumers of past comics and stimulates sales in that market.
    Keywords: copyright, piracy, e-book, difference-in-difference, comic
    JEL: D12 L82 M3 O34
    Date: 2016–12–29
  7. By: Meloyan, Artak; Bakhtavoryan, Rafael
    Abstract: No other form of promotional tools can substitute coupons in promotional campaigns. Due to their unique dual impact (price discount and informational stimulant) on consumption, coupons are widely used by different manufacturers and stores. However, to the best of our knowledge, no prior research has been done regarding the analysis of the impact of coupons on market shares of national brand and private label food products. To fill this void, the goal of this study was to examine the relationship between coupons and market shares in the context of national brand and private label food products by estimating the Almost Ideal Demand System model and using the Nielsen Homescan panel data on household purchases of ready-to-eat cereal, yogurt, and spaghetti sauce from January of 2012 through December of 2014. Estimation results revealed a significant relationship between coupon values and market shares of the food product brands considered. However, the effects of coupon values on the market shares were varied for national brands and private labels. In particular, with the exception of other brands of yogurt, for national brands, market share elasticities with respect to coupon values were positive, suggesting that market share of national brands increased with an increase in coupon values. For private label of cereal and spaghetti sauce, market share elasticities with respect to coupon values were negative, indicating that an increase in coupon values led to a decline in their market shares.
    Keywords: coupons, market shares, brands, demand system, Consumer/Household Economics, Demand and Price Analysis, D12,
    Date: 2017–01–16
  8. By: Fackler, Thomas A.; Nagler, Markus; Schnitzer, Monika; Watzinger, Martin
    Abstract: We study the 1956 consent decree against the Bell System to investigate whether patents held by a dominant firm are harmful for innovation and if so, whether compulsory licensing can provide an effective remedy. The consent decree settled an antitrust lawsuit that charged Bell with having foreclosed the market for telecommunications equipment. The terms of the decree allowed Bell to remain a vertically integrated monopolist in the telecommunications industry, but as a remedy, Bell had to license all its existing patents royalty-free. Thus, the path-breaking technologies developed by the Bell Laboratories became freely available to all US companies. We show that in the first five years compulsory licensing increased follow-on innovation building on Bell patents by 17%. This effect is driven mainly by young and small companies. Yet, innovation increased only outside the telecommunications equipment industry. The lack of a positive innovation effect in the telecommunications industry suggests that market foreclosure impedes innovation and that compulsory licensing without structural remedies is ineffective in ending it. The increase of follow-on innovation by small and young companies is in line with the hypothesis that patents held by a dominant firm act as a barrier to entry for start-ups. We show that the removal of this barrier increased long-run U.S. innovation, corroborating historical accounts.
    Keywords: Antitrust; Compulsory Licensing; innovation; Intellectual Property
    JEL: K21 L40 O3 O33 O34
    Date: 2017–01

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