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on Technology and Industrial Dynamics |
| By: | Klaus Schmidt (University of Munich) |
| Abstract: | Many high technology goods are based on standards that require several essential patents owned by different IP holders. This gives rise to a complements and a double mark-up problem. We compare the welfare effects of two different business strategies dealing with these problems. Vertical integration of an IP holder and a downstream producer solves the double mark-up problem between these firms. Nevertheless, it may raise royalty rates and reduce output as compared to non-integration. Horizontal integration of IP holders solves the complements problem but not the double mark-up problem. Vertical integration discourages entry and reduces innovation incentives, while horizontal integration always benefits from entry and innovation |
| Keywords: | IP rights, complementary patents, standards, licensing, patent pool, vertical integration |
| JEL: | L1 L4 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:274&r=tid |
| By: | Gerard Llobet (CEMFI, Centro de Estudios Monetarios y Financieros); Javier Suarez (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | We assess the effects of imitation and intellectual property (IP) protection in a model of industry dynamics in which the value of IP is eroded by further innovations and imitations. Innovations result from the development of ideas engendered by entrepreneurs. We find that innovation and welfare are decreasing in the protection of IP against further innovations, while their relationship with the protection against imitations typically has an inverted-U shape (partly because imitation reduces the resistance of incumbents to innovators). We also find that the welfare gains from increasing IP protection increase if entrepreneurs are financially constrained. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2010_1001&r=tid |
| By: | Czarnitzki, Dirk; Thorwarth, Susanne |
| Abstract: | This paper explores the contribution of design activities on product market performance of Belgian companies. While there is mounting evidence that design can be seen as a strategic tool to successfully spur sales of new product developments at the firm level, the topic of design innovation has not been linked to the open innovation concept yet. In this paper we empirically test whether design activities conducted in-house differ in their contribution to new product sales from externally acquired design. Using a large crosssection of manufacturing and service firms, we investigate the effects on sales of products new to the market and of imitation or significantly improved products of the firm. At first glance, we find the paradox that externally acquired design is not superior to in-house design activities. This effect is robust to several modifications of the model specification. As earlier literature on new technological developments in high-tech sectors, we argue, however, that external design may not affect the sales of market novelties as the “market news” may spill-over quickly to rivals through common customers and suppliers including external designers. |
| Keywords: | Design; R&D; Collaboration; Open Innovation; Product Market Performance; |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/250665&r=tid |
| By: | Bouguezzi, Fehmi |
| Abstract: | This paper compares patent licensing regimes in a Hotelling model where firms are located symmetrically and not necessary at the end points of the city. I suppose that one of the firms owns a process innovation reducing the marginal unit cost. This patent holding firm will decide to sell a license or not to the non innovative firm and will choose, when licensing, between a fixed fee or a royalty. The key difference between this paper and other papers is that here I suppose that firms are not static and can move along the linear city symmetrically. I find that when there is no licensing, Nash equilibrium exists only when innovation is non drastic. I also find that royalties licensing is better than fixed fee licensing when innovation is small. When the innovation is intermediate I find that fixed fee is better than a royalty. The paper shows that a fixed fee is not better than a non licensing regime independently of the innovation size and the optimal licensing regime is royalties when innovation is small. Finally, I show that a patent holding firm should not license its innovation when it is intermediate or drastic |
| Keywords: | Hotelling model; Technology transfer; Patent licensing |
| JEL: | L0 D45 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21055&r=tid |
| By: | Thomas Giebe (Humboldt University at Berlin) |
| Abstract: | We consider procurement of an innovation fromheterogeneous sellers. Innovations are random but depend on unobservable effort and private information. We compare two procurement mechanisms where potential sellers first bid in an auction for admission to an innovation contest. After the contest, an innovation is procured employing either a fixed prize or a first–price auction. We characterize Bayesian Nash equilibria such that both mechanisms are payoff–equivalent and induce the same efforts and innovations. In these equilibria, signaling in the entry auction does not occur since contestants play a simple strategy that does not depend on rivals’ private information. |
| Keywords: | Contest, Auction, Innovation, Research, R&D, Procurement, Signaling |
| JEL: | D21 D44 D82 H57 O31 O32 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:307&r=tid |