nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2017‒03‒12
two papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Pricing the Transfer of Intellectual Property: A Plea for Regulated and Internationally Coordinated Profit Splitting By Richter, Wolfram F.; Breuer, Markus
  2. A Theory of Grand Innovation Prizes By Galasso, Alberto; Mitchell, Matthew; Virag, Gabor

  1. By: Richter, Wolfram F.; Breuer, Markus
    Abstract: Taxing intellectual property effectively is a challenging task. With its BEPS initiative the OECD (2013) aims at taxing intangibles in accordance with value creation although difficulties in determining the jurisdiction in which value creation occurs are acknowledged. The European Commission promotes the introduction of a Common Consolidated Corporate Tax Base (CCCTB) to neutralize profit shifting. The drawback of this proposal is that incentives are set to relocate R&D activities to low-tax countries. This is the background against which the present paper pleads for a regulated and internationally coordinated split of the profits earned with licensed know-how.
    JEL: H25 O34 M48
    Date: 2016
  2. By: Galasso, Alberto; Mitchell, Matthew; Virag, Gabor
    Abstract: The past decade has witnessed a resurgence in innovation awards, in particular of Grand Innovation Prizes (GIPs) which are rewards to innovators developing technologies reaching performance goals and requiring breakthrough solutions. GIPs typically do not preclude the winner also obtaining patent rights. This is in stark contrast with mainstream economics of innovation theories where prizes and patents are substitute ways to generate revenue and encourage innovation. Building on the management of innovation literature which stresses the difficulty to specify ex-ante all the technical features of the winning technologies, we develop a model in which innovative effort is multi-dimensional and only a subset of innovation tasks can be measured and contracted upon. We show that in this environment patent rights and cash rewards are complements, and that GIPs are often preferable to patent races or prizes requiring technologies to be placed in the public domain. Moreover, our model uncovers a tendency for patent races to encourage speed of discovery over quality of innovation, which can be corrected by GIPs. We explore robustness to endogenous entry, costly public funds, and incomplete information by GIP organizers on the surplus created by the technology.
    Keywords: innovation; patent; prizes
    Date: 2017–02

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