nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2017‒05‒28
four papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  2. A Study of the Evolution of Nature and Narration of Brands in an Emerging Market By Koshy, Abraham; Narayanan, Priya
  3. Does patenting always help new-firm survival? By Masatoshi Kato; Koichiro Onishi; Yuji Honjo
  4. Open Source and Competition Strategy Under Network Effects By Yu Wang; Yu Chen; Bonwoo Koo

  1. By: J.Lowenberg-DeBoer (Department of Agricultural Economics, College of Agriculture, Purdue University, W. Lafayette, IN); Shehu Musa (University of Science and Technology (KUST) Wudil, P.M.B 3244 Kano – Nigeria); Christopher A. Wolf
    Abstract: With five million bags sold in the 2007-2015 period and thousands of rural vendors, the Purdue Improved Crop Storage (PICS) bags have been a very successful innovation for African and Asian farmers. The primary Purdue University intellectual property (IP) in PICS is the trademark. The goal of this study is to describe the role of PICS trademark licensing in the PICS success. Some key points from the study: •Trademarking PJCS seems to have been an effective strategy for combating low quality imitators. Initially, PICS trademarking was suggested by a Nigerian PICS manufacturer as a way to manage imitators. While several large manufacturers have made their own version of the triple layer PICS bag, none of those larger businesses tried to use the trademark. The small "backyard" manufacturers who tried to use the trademark stopped when sent a cease and desist letter by Purdue. Anecdotal accounts indicate that West African farmers have confidence in PICS trademarked bags and prefer to buy them to store their crops. •As donorfunding wound downfor PJCS projects, the trademark became the main mechanism for Purdue support to manufacturers and licensees. The trademark license provides a formal, legal structure within which that relationship can function. Ina context where national institutions are weak, many manufacturers and distributors find that technical support from Purdue attractive. The support provided ranged widely from help with manufacturing problems to facilitating succession when a licensee died without leaving succession plans. •PJCS has shown that African and Asian licensees are willing topay licensefees, but the transactions and opportunity costs are high on both sides. Those transactions costs include bank wire fees, exchange costs, staff effort and informal taxes required for the paperwork. In the developing country context where cash is hard to come by and work capital perpetually lacking, there is a real opportunity cost of sending some of that money out of the country, instead of reinvesting it in the business. •The sustainability of the PJCS brand probably requires moving management outside of the university. University business processes are slow and cumbersome. Management costs are high because of public sector accounting and personnel rules. University faculty and staff have many responsibilities; they cannot devote full time to commercialization of an innovation. •The most durable impact of the PICS project is in the private investment in developing the next generation of hermetic grain storage for smallholder farmers. Twenty years ago those companies would have dismissed the idea of developing grain storage technology for small holder farmers. The perception was that smallholder farmers lacked the entrepreneurial motivation and/or the cash flow to be a substantial market. PICS showed the business community that there is a market on smallholder farms for technologies that solve their problems.
    Keywords: agriculture,technology,intellectual property,licensing,stewardship
    JEL: Q16
    Date: 2017
  2. By: Koshy, Abraham; Narayanan, Priya
    Abstract: Brands evolve over time as a result of factors that facilitate or force. Such changes could, firstly, be the result of changes in the operating environment, such as changes in either consumer-related aspects like consumer needs, tastes, preferences, and buying behavior; or changes in external aspects such as technological developments, regulations, competitive landscape and competitive behavior. The paper studies how local (Indian) brands have evolved over the past in terms of their nature and narration, through an analysis of the elements of brand identity and image, brand communication, and brand portfolio. The paper then identifies the parallels that this evolution might have with evolution of an emerging market, where technology, competitive scenario, consumer expectations and consumer demographics have evolved rapidly. A study of ten local brands through case studies and consumer perceptions shows that brand identity is perceived to lie on the spectrum of completely changed to completely unchanged. This evolution can be the result of strategy or situation, or a combination of both. Also, brand evolution can be classified along a two-dimensional matrix of gradation of transformation (drastic vs. gradual) and driver of transformation (internal vs. external). Components of brand identity might change and yet, identity might be perceived as remaining unchanged. Based on the pattern of evolution, brands can be categorized into four groups: stable brands (no change), contemporized brands (marginal change), evolved brands (major change), and transitional brands (sequential change). Unlike prior literature, the current study provides a useful framework to analyze the evolution of brands in an emerging market.
    Date: 2017–05–23
  3. By: Masatoshi Kato (School of Economics, Kwansei Gakuin University); Koichiro Onishi (Faculty of Intellectual Property, Osaka Institute of Technology); Yuji Honjo (Faculty of Commerce, Chuo University)
    Abstract: This study examines the role of patenting activities in new-firm survival, using a data set of firms founded from 2003 to 2010 in the Japanese manufacturing and software sectors. In particular, we distinguish the effects of patenting activities of chief executive officers (CEOs) from those of patenting activities of firms, taking into account exit routes: bankruptcy, voluntary liquidation, and merger. It is found that firms that engaged in patenting activities after start-up are less likely to go bankrupt. It is also found that firms whose CEOs have experience in patenting activities before start-up are less likely to go bankrupt. In contrast, we provide evidence that CEOs' involvement in patenting activities after start-up are not helpful for survival. Furthermore, the results based on subsamples according to firm age show that while firms' patenting activities do not increase the probability of survival in the early years since start-up, they help new firms surviving after a certain period of time since start-up. While CEOs' pre-entry patenting activities have a significant explanatory power in reducing the probability of bankruptcy within a certain period of time since start-up, they have no longer significant effect afterwards. Further, CEOs' patenting activities after start-up increase the probability of exit through bankruptcy and voluntary liquidation especially after a certain period of time since start-up.
    Keywords: New firm, patenting, chief executive officer, survival, firm age
    Date: 2017–05
  4. By: Yu Wang (School of Economics, Nanjing University); Yu Chen (University of Graz); Bonwoo Koo (University of Waterloo)
    Abstract: This study analyzes a firm's decision to adopt an open source strategy in the development of a primary system product that has an indirect network effect on complementary accessory products, and evaluates its impact on market competition and social welfare. It shows that open source systems can drive proprietary systems out of the market if system development costs are high and the network effect is strong. This study also shows that the presence of open source systems can benefit proprietary firms due to consumers' higher willingness-to-pay for accessory products, and increase total industry profit and social welfare.
    Keywords: Hotelling model, packaged goods, network effect, horizontal product differentiation
    JEL: L14 L15 L17 L86
    Date: 2017–05

This nep-ipr issue is ©2017 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.