Intellectual Property and Competition (original) (raw)
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Journal of Industrial Organization Education, 2006
Which kind of intellectual property regime is more favorable to innovation: one that enforces patents or one that does not? Economic theory is unable to answer this question, as valid arguments can be made both for and against patents; hence we must turn to empirical evidence. In this paper, we review empirical evidence gathered by other researchers and add new evidence of our own. We conclude that the evidence suggests that patents do not promote innovation, but instead retard it.
Competition, Innovation And Increasing Returns ∗
Economics of Innovation and New Technology, 2000
This paper concerns the operation of competition in the presence of a high rate of innovation and increasing returns. Given free competition there is likely to exist, in this case, a tendency towards what may be called 'dynamic equilibrium', a tendency, that is to say, for the rate of investment in product development to rise or fall towards the level at which this investment yields only a normal return. Thus, competition, increasing returns and innovation may co-exist.
Does intellectual monopoly stimulate or stifle innovation?
European Economic Review, 2012
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 sti ‡es innovation. Speci…cally, we analyze the growth and welfare e¤ects of patent protection in the form of pro…t division between sequential innovators along the quality ladder. We show that patent protection has asymmetric e¤ects on vertical innovation (i.e., quality improvement) and horizontal innovation (i.e., variety expansion). Maximizing the incentives for vertical (horizontal) innovation requires a pro…t-division rule that assigns the entire ‡ow pro…t to the entrant (incumbent) of a quality ladder. In light of this …nding, we argue that in order to properly analyze the growth and welfare implications of patent protection, it is important to disentangle its di¤erent e¤ects on vertical and horizontal innovation.
Competition Policy and Innovation
Oxford Review of Economic Policy, 2002
The question addressed by the paper is whether standard procedures and widely accepted insights of competition policy remain valid when one deals with potentially anti-competitive conduct in innovative industries. The question of appropriateness arises because competition in these industries displays features that are radically different from those encountered in traditional sectors of the economy. Competition is for the market rather than in the market, dynamic aspects of competition matter more than allocative aspects, intellectual property rights (IPR) reinforce network effects present in knowledge-based industries. The paper examines why these differences matter with respect to market delineation, assessment of intensity of competition and, predatory conduct. It also raises the question to what extent competition law limits the innovator's rights not to license them to others, especially when they correspond to essential facilities. It explores the problem created by excessive protection as well as the holdup problem that arises in a context of sequential innovations. It examines the antitrust position in regard to the treatment of collaborative arrangements among holders of IPR's, such as cross-licenses, patent-pools and joint standard settings. Finally, it presents a discussion on a possible role of competition law in shaping intellectual property laws in order to benefit from the complementarity's between intellectual protection and antitrust rules.
Competition, Innovation and Welfare*
The Manchester School, 2011
We show the effects of Bertrand and Cournot competition on R&D investment and social welfare in a duopoly with R&D competition where success in R&D is probabilistic. We show that R&D investments are higher under Bertrand (Cournot) competition when R&D productivities are sufficiently low (high), and this holds for both drastic and non-drastic R&D. We also show that Cournot competition can generate higher social welfare in absence of knowledge spillover and this happens if R&D is drastic, difference between the pre-innovation and the post-innovation costs is sufficiently large and the R&D productivities are moderate. So, our results differ significantly from both the deterministic R&D model and the patent race model.
2007
The economics of intellectual property rights is based on a narrow view of both competition and technological knowledge. In this paper we suggest some ways of enriching this framework with a more realistic and empirically based view of both and, by means of a simulation model, we investigate some consequences that different appropriability regimes could have in such a richer framework. Our main conclusion is that the implications of intellectual property rights for technological and industrial evolution and for social welfare are very much dependent upon specific characteristics of the competition process and of the underlying technological knowledge.
Competition & Innovation: New Evidence from US Patent and Productivity Data
SSRN Electronic Journal, 2000
Is there any evidence that innovation and technological progress are contained by competition and fostered by monopoly power? Our results based on a newly constructed dataset of US manufacturing industries observed over two decades suggest that this is not the case. On the contrary, using both patent statistics and productivity growth as alternative measures of innovation and technical change, we observe faster technological advances in more competitive markets. These results are robust to changes in the econometric techniques used to model nonlinearity in the competition-innovation relationship and to the inclusion of non-manufacturing industries in the estimation sample.
Essays on the Economics of Innovation
2016
The first part of this thesis studies the recent emergence of new actors in the market for patents, namely, non-practicing entities, who acquire patents with no aim to use them to produce a final good. On the one hand, patent assertion entities seek to acquire patents so as to monetize them through the threat of litigation for patent infringement. On the other hand, defensive aggregators acquire patents to provide safety from litigation brought by patent trolls to their affiliated firms. We analyze the strategic behavior of non-practicing entities in the patent acquisition process and highlight patent assertion entities' greater ability to preempt patents as compared to producing firms. Then, we examine the effectiveness of defensive aggregators to protect firms against litigation brought by patent assertion entities. Finally, the last part instead studies the effects of one-way spillovers in the context of non-tournament models of R&D in which ex-ante identical firms engage in ...