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on Technology and Industrial Dynamics |
| By: | Chu, Angus C.; Cozzi, Guido; Galli, Silvia |
| Abstract: | This study develops an R&D-based growth model that features both vertical and horizontal innovation to shed some light on the current debate on whether patent protection stimulates or stifles innovation. Specifically, we analyze the growth and welfare effects of patent protection in the form of profit division between sequential innovators along the quality ladder. We show that patent protection has asymmetric effects on vertical innovation (i.e., quality improvement) and horizontal innovation (i.e., variety expansion). Maximizing the incentives for vertical (horizontal) innovation requires a profit-division rule that assigns the entire flow profit to the entrant (incumbent) of a quality ladder. In light of this finding, we argue that in order to properly analyze the growth and welfare implications of patent protection, it is important to disentangle its different effects on vertical and horizontal innovation. |
| Keywords: | economic growth; innovation; intellectual property rights |
| JEL: | O34 O31 O40 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29061&r=tid |
| By: | Thomas Bolli (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Woerter (KOF Swiss Economic Institute, ETH Zurich, Switzerland) |
| Abstract: | This paper analyzes the relationship between competition and R&D cooperation with universities and competitors. Our simple model predicts that more competitors reduce the incentives for horizontal cooperation as it diminishes the gains from “collusion”. Assuming that the value of synergies and spillovers created by cooperation depends on competition intensity reveals two distinct and opposing incentives for cooperation. While synergies foster R&D cooperation, spillovers may hinder cooperation. We mainly hypothesize that university cooperation corresponds to product innovation and hence quality competition, while horizontal cooperation lead to process innovations and therefore relates to price competition. We test these hypotheses based on Swiss firm-level panel data controlling for simultaneity of cooperation decisions and endogeneity of competition. Our empirical analysis supports the relevance of distinguishing between competition dimensions and cooperation partners, respectively. We find that price competition matters for both university and horizontal cooperation and it takes the form of an inverted U-shape. On the contrary, quality competition only matters for university cooperation and the relationship shows a U-form. Moreover we see that the number of principal competitors is significantly related only to cooperation between competitors and the relationship shows an inverted U-form. Hence, markets with a medium number of competitors are more receptive for horizontal cooperation. In sum these findings advance our understanding of the relationship between innovation and competition policy. |
| Keywords: | innovation cooperation, university cooperation, horizontal cooperation, number of competitors, price competition, quality competition, synergy, knowledge spillover, collusion |
| JEL: | O3 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:11-275&r=tid |
| By: | MOTOHASHI Kazuyuki |
| Abstract: | This paper presents the results of a comprehensive analysis of the innovative activities of the entire population of Japanese firms by using a linked dataset of Establishment and Enterprise Census and the IIP Patent Database (JPO patent application data). As of 2006, it was found that about 1.4% of about 4.5 million firms filed patents, and substantial patenting activities were found not only in the manufacturing field but also in a wide range of fields such as B2B services and financial sectors. In addition, a firmfs survival and growth are regressed with patenting and open innovation (measured by joint patent application with other firms and universities), and it is shown that innovative activities measured by patenting are positively correlated with such firm performance. It is also found that the relationship between patents and the survival rate is stronger for larger firms, while that between patents and firm growth is stronger for smaller firms. |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11007&r=tid |