patent pools as a solution to efficient licensing of complementary patents some experimental evidence production requiring licensing groups of complementary patents implements a coordination game among patent holders who can price patents by choosing among combinations of fixed and royalty fees summed across patents these fees become the total producer cost of the package of patents royalties because they function as excise taxes add to marginal costs resulting in higher prices and reduced quantities of the downstream product and lower payoffs to the patent holders using fixed fees eliminates this inefficiency but yields a more complex coordination game in which there are multiple equilibria which are very fragile in that small mistakes can lead the downstream firm to not license the technology resulting in inefficient outcomes we report on a laboratory market investigation of the efficiency effects of coordinated pricing of patents in a patent pool we find that pool like pricing agreements can yield fewer coordination failures in the pricing of complementary patents

ingredients of famine analysis availability and entitlements famines often take place in situations of moderate to good food availability without any significant decline of food supply per head the paper presents an alternative approach to famines which does not concentrate on availability but on people s ability to command food through legal means available in the society including the use of production possibilities trade opportunities entitlements vis a vis the state etc the approach is explained focusing on exchange entitlement mappings fluctuations in which can lead to big shifts in the intergroup distribution of food command the approach is then applied to the bengal famine of 1943 the ethiopian famine in wollo in 1973 and the bangladesh famine in 1974 and some general conclusions are drawn about the nature and classes of famines

collateral damage for r d manufacturers how patent sharks operate in markets for technology patent sharks small firms that exploit information asymmetries in markets for technology to gain patent based competitive advantages challenge established theory by which i markets for technology benefit large firms and ii intellectual property rights systems strictly support markets for technology empirically linking the sharks different assault strategies to the patents they deploy we illustrate that patent sharks will likely be an enduring phenomenon in markets for technology we discuss policy and strategy implications copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

fragmented property rights and incentives for r d where product innovation requires several complementary patents fragmented property rights can limit firms willingness to invest in r d we consider the research intensity in multiple simultaneous r d contests and how it depends on whether firms already hold relevant patents as well as the availability of an option to invent around a measure of technological uncertainty is also analyzed the multiple patent product involves an important hold up problem that can reduce the overall r d effort invent around options moderate this problem we also analyze targeted equilibria in which the aim of r d can be to hold up a rival

patent pools litigation and innovation this article analyzes patent pools and their effects on litigation incentives overall royalty rates and social welfare when patent rights are probabilistic and can be invalidated in court with probabilistic patents the license fees reflect the strength of the patents we show that patent pools of complementary patents can be used to discourage infringement by depriving potential licensees of the ability to selectively challenge patents and making them committed to a proposition of all or nothing in patent litigation if patents are sufficiently weak patent pools with complementary patents reduce social welfare as they charge higher licensing fees and chill subsequent innovation incentives

standard essential patents a major policy issue in standard setting is that patents that are ex ante not that important by being included into a standard may become standard essential patents in an attempt to curb the monopoly power that they create most standard setting organizations require the owners of patents covered by the standard to make a loose commitment to grant licenses on reasonable terms such commitments unsurprisingly are conducive to litigation this paper builds a framework for the analysis of these patents identifies several types of inefficiencies attached to the lack of price commitments and shows how structured price commitments restore competition and why such commitments may not arise spontaneously in the marketplace

credible spatial preemption it is often argued that incumbent firms may deter entry by preemptive investment in new goods we show that these conclusions are reversed when multiproduct incumbentfirms may exit in response to entry once entrants are in an industry an incumbent will often want to withdraw some goods to prevent competition with the entrant from reducing profits on other goods such a reaction makes entry more attractive to a potential entrant the equilibrium industry structure is less likely to be monopolistic as the goods are better substitutes as exit costs are low and as the competition between producers of the same good is more intense

the institutional causes of china s great famine 1959 1961 this paper studies the causes of china s great famine during which 16 5 to 45 million individuals perished in rural areas we document that average rural food retention during the famine was too high to generate a severe famine without rural inequality in food availability that there was significant variance in famine mortality rates across rural regions and that rural mortality rates were positively correlated with per capita food production a surprising pattern that is unique to the famine years we provide evidence that an inflexible and progressive government procurement policy where procurement could not adjust to contemporaneous production and larger shares of expected production were procured from more productive regions was necessary for generating this pattern and that this policy was a quantitatively important contributor to overall famine mortality

patent policy imitation incentives and the rate of cumulative innovation abstract we study an infinite horizon cumulative innovation model in which patents are characterized by their length and the likelihood of being ruled valid in a patent infringement litigation strengthening patent protection via a greater validity or length has two opposing effects on innovation 1 a negative litigation effect due to increasing the litigation threat for future innovators and 2 a positive competition effect due to reducing profit eroding imitation by competitive firms without innovation capacity the optimal innovation maximizing patent policy balances these two opposing effects for moderate patent validity longer remaining lifetime increases innovation due to the competition effect the opposite is true for higher validity for which the litigation effect dominates moderate validity and infinite patent length maximizes innovation when future profits are subject to greater discounting and r d costs are low while strong validity and finite length stimulates more innovation under lower discounting and higher r d costs

the impact of the timing of patents on innovation performance abstract in the context of industry standard setting firms face the strategic decision of whether to move faster than competitors or wait for more information that reduces uncertainty these decisions are even more challenging if there are multiple standards and if there are benefits to belonging to more than one standard this paper examines the effect of the timing of patents on a firm s innovation performance the strategic logic of real options posits that patent timing is determined by the tension between the value of preemption and the value of waiting we analyze 680 dvd disc patents in dvd patent pools to test the effect of the timing of patents on innovation performance consistent with real options logic under high uncertainty the later the timing of the patent the higher the innovation performance while under low uncertainty there is an early mover advantage

the direction of innovation abstract how do innovation policies affect the direction of research is market based innovation too radical or too incremental we construct a novel and tractable model of the direction of innovation firms pursue inefficient research directions because they race to discover easy yet less valuable projects and because they work on difficult inventions where they can appropriate a larger portion of the social value fixing these inefficiencies requires policy to condition on properties of inventions that could have been discovered but were not policies which do not do so like patents and prizes may fail to encourage firms to research in the efficient direction even if they obtain the optimal quantity of r d

do patents over compensate innovators is the current level of patent protection too high or too low to address this issue this paper reformulates the theoretical analysis of the optimal level of patent protection to take into account the empirical findings of the innovation production function literature this literature finds a strong relationship between r d spending and inventions and estimates an elasticity of the supply of inventions of 0 5 or more the paper then assesses the current level of patent protection exploiting estimates of the private and social returns to r d taken from the empirical literature and other available sources although more research is needed for a more precise assessment the evidence available suggests that patents do not over compensate innovators vincenzo denicolo

efficient division of profits from complementary innovations abstract many products including microprocessors telecommunications devices computer software and on line auction services make use of multiple technologies each of which is essential to make or sell the product the owner of one technology benefits from the existence of complementary technologies we show that despite this externality the structure of payoffs that support efficient r d investment by duopolists racing to discover a single innovation generalizes to the structure that supports efficient investment for complementary innovations the paper also examines how alternative intellectual property regimes and legal institutions affect r d investment in complementary technologies the results have policy implications for the organization of r d the assessment of damages for patent infringement and allocations of value in patent pools

rural urban disparity and sectoral labour allocation in china this study examines china s rural urban segmentation and its causes in the context of economic reforms household survey and aggregate data indicate a v shaped process in which rural urban consumption and income differentials decreased between 1978 and 1985 but then have continually increased to historically high levels this sectoral division is consistent with production function estimates based on provincial data that reveal higher labour productivity in urban state owned industries than in rural industries and agriculture to explain the v shaped change we argue that the precedent of successful rural reforms raised farmers relative earnings but the remaining obstacles to an efficient sectoral allocation of labour have prevented china from eliminating dualism recent financial policies consisting of urban price subsidies and increased investment credits have also had influential distribution effects that are biased against the rural sector

innovation policy for directing technical change in the power sector this paper discusses policy instruments for redirecting technical change within the electricity sector to mitigate climate change first we unravel the mechanism behind directed technical change explaining why markets may underprovide innovations in expensive renewable technologies in comparison to innovations in energy efficient fossil fuel generators subsequently we characterize technical change in electricity generation technologies stressing the heterogeneity of knowledge spillovers both within and between clean electricity generation technologies we argue that there exists a rationale for a portfolio approach to innovation in the electricity sector i e optimal innovation policies are neither fully generic nor fully specific and they need to be adapted in response to new information learned by the government the existing innovation literature does not however provide a clear cut answer for designing such a policy we compare policy instruments and argue that public r d support to clean technologies either in the form of subsidies or prizes seems to be the prime candidate for implementing non generic innovation policy

licensing policy and technology adoption in standard setting organizations the standard setting organizations decisions on licensing policy and standard s technological specification and the ensuing implications for social welfare are analyzed the author finds the conditions under which a licensing rule that grants monopoly power to the licensors whose technology is adopted in the standard can be employed by the members of the consortium ex post licensing moreover it is shown that the adoption of ex post licensing might lead to the inefficient exclusion of an efficient stand alone licensor finally the author discusses the conditions under which a policy of ex ante licensing can be less efficient than ex post licensing jel k21 l15 l24 l42

distributional conflict in organizations abstract hierarchy can function as an instrument to channel influence activities or power struggles in organizations contrary to what has frequently been argued we show that multi divisional organizations may involve lower influence costs than single tier organizations even though they offer more scope for organizational conflict and have more executives that can be influenced these benefits derive from two effects first part of the conflict in multi divisional organizations takes place on the division level where a small number of agents fight over only a fraction of the overall prize second by grouping agents into common divisions multi divisional organizations create free rider problems in rent seeking our model sheds new light on the desirability of divestitures and the transition from the u to the m form by us corporations in the 1920s

efficient patent pools the paper builds a tractable model of patent pools agreements among patent owners to license sets of their patents it provides a necessary and sufficient condition for patent pools to enhance welfare and shows that requiring pool members to be able to independently license patents matters if and only if the pool is otherwise welfare reducing the paper allows patents to differ in importance asymmetric blocking patterns and licensors to also be licensees we undertake some initial exploration of the impact of pools on innovation the analysis has broader applicability than pools being relevant to a number of co marketing arrangements

unfolding social hierarchies abstract consider a large population of finitely lived agents organized into n different hierarchical levels every period all those placed at each level are randomly matched to play a given symmetric game based on the resulting outcome a fraction of agents who within their own level attain the highest payoffs are promoted upwards on the other hand newcomers replacing those who die every period enter at the lowest level and choose irreversibly the strategy to be played for the rest of their life this choice is made with some noise by imitating one of the strategies adopted at the highest level in this setup the unique long run behavior of the system is fully characterized for the whole class of 2 2 coordination games and two alternative variations of the model the results crucially depend on the key institutional parameters and n in particular it is shown that inefficient behavior prevails in the long run even when risk dominated if promotion is only mildly selective high and the social system is quite hierarchical large n in a stylized manner these parameter conditions may be viewed as reflecting a sort of institutional deficiency that impairs economic performance journal of economic literature classification numbers c70 c72 c73 d72

regulating a monopolist with unknown demand and cost functions we consider the design of regulatory policy when the regulator is imperfectly informed about both the firm s cost function and the demand function it faces to some extent the optimal policy here is the natural combination of the optimal policies when there is uncertainty only about either demand or cost important qualitative differences also exist however for example it may be optimal to set prices below marginal cost and the pricing authority delegated to the firm may be more limited when there is uncertainty about both cost and demand

the economics of invention incentives patents prizes and research contracts though public intervention in the market for research is virtually universal economists have paid surprisingly little attention to the choice of the form of research incentive in a given market structure many studies concentrate on patents but any assumption of their superiority over other incentives has been founded on intuition rather than on formal analysis in this paper i analyze the choice between three of the most common alternative means of public intervention in the research market namely patents prizes and direct contracting for research services i show why and under what conditions any one of the three may be preferred by a social welfare maximizing administrator in a competitive economy using a model that for the first time pays explicit attention to differences in the informational roles of each of these alternatives in the extensive literature on the economics of patents see arnold plant 1934 fritz machlup 1958 charles taylor and z a silberston 1973 morton kamien and nancy schwartz 1975 and f m scherer 1977 for valuable surveys formal analysis weighs the benefits of patents as a solution to the market failure associated with the inappropriability of knowledge against the welfare cost due to the restriction on the use of the knowledge generated and this tradeoff is optimized by patent life adjustment in william nordhaus 1969 scant analytical attention is paid to alternative incentive mechanisms an exception is ben yu 1981 who considers the role of prior contracting for inventions but as many writers for example dan usher 1964 yoram barzel 1968 joseph stiglitz 1969 carole kitti 1973 glenn loury 1979 partha dasgupta and stiglitz 1980a have pointed out in various contexts the incentive offered by an unlimited patent to competitive researchers may be excessive due to the common pool problem discussed further in section i below if the patent administrator and researchers share the same information as implicitly assumed in previous models then the patent life limitation can be adjusted to provide the optimal patent incentive given the common pool problem but in all such models patents would not be chosen in a fully optimized fiscal system researchers and the administrator are assumed to have identical information about the shadow price of potential inventions a patent is just a means of turning this shadow price into a monetary reward but monetary compensation can instead be offered directly to researchers by the state assuming that patent revenues incur a higher deadweight loss than an equivalent amount of public funds financed by less distortionary means for example a minimally efficient tax system appropriate prizes or government contracts are socially preferable to patents with optimal lives if the patent is ever to be the optimal incentive mechanism for research it must possess advantages not captured in existing models informal discussions of patents emphasize their informational role to include the latter as a justification for decentralized invention incentives i incorporate an ex ante imbalance of information about costs and benefits of research in the model presented in section ii but this alone is not quite enough it is further necessary to specify that the terms of the award must be fixed before department of economics economic growth center box 1987 yale station yale university new haven ct 06520 i thank with the usual caveat marguerite alejandro wright cindy arfken martin baily nuong brennan steven englander robert evenson richard levin richard nelson susan rose ackerman denis wright and two referees for assistance of various kinds

safe nests in global nets internationalization and appropriability of r d in wireless telecom this paper documents the case of the wireless telecom industry to bring new empirical evidence to the debate on the internationalization of research and development r d activities us patent statistics on the four industry leaders ericsson motorola nokia and qualcomm illustrate the growing trend of the internationalization of r d over the 1990s yet we show that the most critical r d projects related to the development of wireless standards remain homebound the paper then leverages qualitative data collected through interviews with informed managers to provide a fresh interpretation for the homeboundedness of critical industrial r d the stickiness of core r d projects to domestic locations is related not only to organizational inertia and the unripe maturation of subsidiaries as suggested by prior literature but particularly to the headquarters centralization of intellectual property ip management which offers a high level of appropriability of r d results the unequal distribution of appropriability across corporate r d networks is at the base of the formation of safe nests domestic r d centers that are sheltered from the forces of globalization because they offer a desirable setting for the exploitation of technologies deriving from a stronger coordination of inventive activities with the management of ip

shared patent rights and technological progress we study how to reward innovators who build on one another rewards come in the form of patents because patent rights are scarce the optimal allocation involves sharing more than one innovator s patent is in force at a given time we interpret such allocations as patents that infringe one another as licensing through an ever growing patent pool and as randomization through litigation we contrast the rate of technological progress under the optimal allocation with the outcome if sharing is prohibitively costly avoiding sharing initially slows progress and leads to a more variable rate of technological progress

grain exports and the causes of china s great famine 1959 1961 county level evidence abstract this study quantitatively evaluates the relative importance of different causes of china s great famine especially for the importance of grain exports we exploit county level over time variations in crop specialization patterns to construct bartik style measures of export shocks using county level panel data from 1955 to 1963 we regress death rates on the bartik export measures with county and province year fixed effects as well as time varying effects of county level observables we use weather shocks to instrument for output and consumption the regression results suggest that increases in grain exports substantially increase death rates this effect is larger in counties that are further from railways and with fewer local chinese communist party members to examine the relative importance of different mechanisms we also estimate the effects of the procurement policy the determinants of grain output and the relationship between death rates and county level average caloric consumption during the famine period the counterfactual experiments indicate that the fall in agriculture production the increase in procurement partly driven by grain exports and the increasingly progressive and inflexible procurement policy collectively increased the number of excess deaths where no single factor dominates in particular grain exports explain 15 percent of excess deaths which is one fourth of the effect of the increase in procurement rates between 1957 and 1959

patent pool formation and scope of patents basic innovations are often fundamental to the development of applications that may be developed by other innovators in this setting we investigate whether patent pools can rectify the lack of incentives for a developer to invest in an application following green and scotchmer 1995 we also wonder whether broad basic patents are necessary in order to provide enough incentives for basic innovators we show that patent pools are more likely

emerging ways to address the reemerging conflict between patenting and technological standardization the relationship between standards and intellectual property rights iprs is a complementary but troubled one the way it is managed affects the way stakeholders contribute to standards and may ultimately affect the way some technologies and even industries evolve a spate of recent legal controversies has been accompanied by the emergence of new mechanisms to help govern the risk of conflict here this article provides an empirical analysis of these attempts to reconcile the aims of these regimes

cross licensing and competition we study bilateral cross licensing agreements between n 2 firms that engage in competition after the licensing phase it is shown that the most collusive cross licensing royalty i e the one that allows the industry to achieve the monopoly profit is sustainable as the outcome of bilaterally efficient agreements in a symmetric setting if the terms of the cross licensing agreements are not observable to third parties the monopoly royalty is the unique symmetric bilaterally efficient royalty however when the terms of the agreements are public the most competitive royalty i e zero can also be bilaterally efficient policy implications regarding the antitrust treatment of cross licensing agreements are derived from these results

patent law and complementary innovations this paper explores which patent policy should be applied to complementary innovations that are aggregated into broader technologies i compare a setting in which complementary innovations must be bundled prior to patenting with a second setting in which they can be patented separately the first setting can improve static efficiency by avoiding the costs resulting from the scattering of complementary patents but it also limits the disclosure of small innovations which may lead to inefficient r d cost duplications a model capturing these effects shows that patenting complementary innovations separately is not efficient when innovations can be developed rapidly this result justifies the enforcement of a severe inventive step or non obviousness requirement in sectors where complementary innovations are frequent

can openness mitigate the effects of weather shocks evidence from india s famine era transformation of countries throughout history rural citizens in developing countries today however remain highly exposed to fluctua tions in the weather this exposure affects the incomes these citizens earn and the prices of the foods they eat recent work has documented the significant mortality stress that rural house holds face in times of adverse weather robin burgess olivier deschenes dave donaldson and michael greenstone 2009 masayuki kudamatsu torsten persson and david stromberg 2009 famines times of acutely low nominal agricultural income and acutely high food prices are an extreme manifestation of this mapping from weather to death lilian c a knowles 1924 describes these events as agricultural lockouts where both food sup plies and agricultural employment on which the bulk of the rural population depends plummet the result is catastrophic with widespread hun ger and loss of life though now confined to the world s poor est countries food shortages and famines were features of most preindustrial societies over time there has been intense debate over what role openness to trade in food might play in

the new patent intermediaries platforms defensive aggregators and super aggregators some assets are traded in liquid markets at transparent prices with the help ome assets are traded in liquid markets at transparent prices with the help of many thriving intermediaries houses and apartments stocks and other of many thriving intermediaries houses and apartments stocks and other fi nancial products books dvds electronics and all sorts of collectibles fi nancial products books dvds electronics and all sorts of collectibles

patents and cumulative innovation causal evidence from the courts cumulative innovation is central to economic growth do patent rights facilitate or impede such follow on innovation this paper studies the effect of removing patent protection through court invalidation on the subsequent research related to the focal patent as measured by later citations we exploit random allocation of judges at the u s court of appeal for the federal circuit to control for the endogeneity of patent invalidation we find that patent invalidation leads to a 50 percent increase in subsequent citations to the focal patent on average but the impact is highly heterogeneous patent rights appear to block follow on innovation only in the technology fields of computers electronics and medical instruments moreover the effect is entirely driven by invalidation of patents owned by large patentees that triggers entry of small innovators suggesting that patents may impede the democratization of innovation

the great leap forward anatomy of a central planning disaster the great leap forward disaster characterized by a collapse in grain production and a widespread famine in china between 1959 and 1961 is found attributable to a systemic failure in central planning wishfully expecting a great leap in agricultural productivity from collectivization the chinese government accelerated its aggressive industrialization timetable grain output fell sharply as the government diverted agricultural resources to industry and imposed an excessive grain procurement burden on peasants leaving them with insufficient calories to sustain labor productivity our analysis shows that 61 percent of the decline in output is attributable to the policies of resource diversion and excessive procurement

patent pools and cross licensing in the shadow of patent litigation this paper develops a framework to analyze the incentives to form a patent pool or engage in cross licensing arrangements in the presence of uncertainty about the validity and coverage of patents that makes disputes inevitable it analyzes the private incentives to litigate and compares them with the social incentives it shows that pooling arrangements can have the effect of sheltering invalid patents from challenges this result has an antitrust implication that patent pools should not be permitted until after patentees have challenged the validity of each other s patents if litigation costs are not too large

tying foreclosure and exclusion in recent years the leverage theory of tied good sales has faced heavy and influential criticism in an important sense though the models used by its critics are actually incapable of addressing the leverage theory s central concerns here the author reconsiders the leverage hypothesis and argues that tying can indeed serve as a mechanism for leveraging market power the mechanism through which this leverage occurs its profitability and its welfare implications are discussed in detail copyright 1990 by american economic association

financing and access in cooperatives abstract cooperative undertakings account for a substantial share of developed market economies and that share is likely to grow with the advent of the new economy the paper develops a dynamic investment framework that relates access policies financing and growth of cooperatives it shows how discriminating among users affects the viability of cooperatives and impacts social efficiency it then argues that in most circumstances the cooperative form even when viable on a stand alone basis is a weak competitor against alternative organizational forms last the paper stresses that access policies involve a standard social trade off between static efficiency and innovation

tirole s industrial regulation and organization legacy in economics jean tirole was awarded the 2014 sveriges riksbank prize in economic sciences in memory of alfred nobel for his analysis of market power and regulation this paper provides an overview of some of that work and of his related contributions to game theory

on the optimality of the patent renewal system the patent system is mainly a renewal system the patent life is chosen by the patentee in return for fees i ask whether such a system can be justified by asymmetric information on costs and benefits of research in such a model i show that renewal mechanisms possibly with subsidies are equivalent to direct revelation mechanisms and therefore cannot be improved on regardless of the objective function under plausible circumstances patents should have a uniform life rather than varying in length as typically occurs under a renewal system

the social selection of flexible and rigid agents people differ in how they respond to their environment some individuals treat each situation as unique and tailor their behavior accordingly while others respond in the same manner regardless of the situation the authors objective is to explore how social systems select from such a heterogeneous population a class of simple hierarchical systems is considered which encompasses some features of corporations and electoral systems a selection process operates on this population which results in successful agents going on to compete against equally successful agents for further advancement the author characterizes the population dynamics and the type of agent that ultimately dominates copyright 1998 by american economic association

some evolutionary foundations for price level rigidity this paper shows that price rigidity evolves in an economy populated by imperfectly rational agents who experiment with alternative rules of thumb in the model firms must set their prices in face of aggregate demand shocks their payoff depends on the level of aggregate demand as well as on their own price and their neighbor s price the latter assumption captures local interactions despite the fact that the rational expectations equilibrium ree is characterized by a simple pricing rule that firms can easily adopt the economy does not converge to the ree for all parameter values when the volatility of monetary innovations is low and interactions among firms are high the aggregate price level exhibits rigidity in that it does not fully react to contemporaneous aggregate demand shocks we discuss the role of the nature of experimentation and of path dependence driven by interactions in explaining these results

optimal cross licensing arrangements collusion versus entry deterrence this paper analyzes optimal cross licensing arrangements between incumbent firms in the presence of potential entrants the optimal cross licensing royalty rate trades off incentives to sustain a collusive outcome vis a vis incentives to deter entry with the threat of patent litigation we show that a positive cross licensing royalty rate which would otherwise relax competition and sustain a collusive outcome dulls incentives to litigate against entrants our analysis can shed light on the puzzling practice of royalty free cross licensing arrangements between competing firms in the same industry as such arrangements enhance incentives to litigate against any potential entrants and can be used as entry deterrence mechanism

the price effects of international airline alliances abstract this paper provides evidence on the effect of international airline alliances on fares the main finding is that alliance partners charge interline fares that are approximately 25 percent below those charged by nonallied carriers according to our theoretical model the main source of this fare reduction is the internalization of a negative externality that arises from the uncoordinated choice of interline sub fares in the absence of an alliance the paper also looks for evidence of an anti competitive alliance effect in the gateway to gateway markets while the point estimates show that an alliance between two previously competitive carriers would raise fares by about 5 percent this effect is not statistically significant

differentiated standards and patent pools we consider patent pool formation by owners of essential patents for differentiated standards that may be complements or substitutes in use pooling improves coordination in terms of royalty setting within a standard but provokes a strategic response from licensors in the competing standard we characterise the incentives to form and defect from pools within standards and show how pool formation and stability depend on competition between standards we also examine strategic patent pool formation by consortium standards and show that policies promoting compatibility of standards may increase or decrease welfare depending on the effects on the incentives to form pools

standards consortia and innovation the development of formal ict standards is a challenging form of collaborative innovation combining consensus decision making and r d rivalry to supplement this formal standard setting process it has thus become frequent that part of the involved firms creates ad hoc consortia to better align positions on a common technology roadmap this paper aims to assess whether such consortia can effectively mitigate r d coordination failure through enhanced cooperation we first develop a theoretical model showing that depending on the nature of firms incentives to contribute proprietary technology different types of r d coordination failure namely a public good or rent seeking problem may occur in equilibrium using a large panel of standards we then confirm empirically the prediction that consortia have different effects on innovation under a public good or rent seeking regime overall we observe an increase in innovation after a firm joined a consortium however this effect is significantly weakened or even reversed for standards characterized by a strong rent seeking regime

cooperating with competitors patent pooling and choice of a new standard abstract i examine the efficiency of patent pooling in a setting that allows for the interplay between the standards process in which owners of essential intellectual property ip develop a new product and the subsequent pooling decision in which ip prices are coordinated if one of the ip owners is also the incumbent of a product that employs the current competing standard referred to as overlapping ownership then the relationship among the ip owners will be both vertical through their ip and horizontal through their competing interests in the final products consumers are better off when ip owners cooperate even when these owners are effectively competitors because of lower prices and greater product variety consumers prefer however that the agreements not admit firms with overlapping ownership these results inform antitrust policy on cooperative agreements among competitors

rules of thumb in games abstract a steady state random matching game model is proposed in which rules of thumb which assign strategies to individual games are the units of choice for individuals costs which reflect complexity or difficulty of use are associated with the rules independently of the games in which they are employed a population equilibrium is a distribution of rules across the population of players such that no individual has an incentive to change rules given the current distribution examples illustrate the concept and existence is demonstrated

famines and economics famines have happened with and without crop failures or wars but they invariably entail a collapse in the command over food of vulnerable subgroups within a society whether through loss of endowment or a contraction in the amount of food that can be acquired from given endowments thus economic analysis can help understand famines viewed as tragic aperiodic magnifications of normal market and governmental failures recent literature in economics and other fields has reflected this change in the conceptualization of famines and it has come with policy implications for famine relieve and prevention

the causes of famine abstract this article argues that sen s theory of famine will lead to the wrong diagnosis and the wrong remedies for famine and will therefore worsen the situation his analysis of the bengal famine is a case in point it is based on unreliable and inaccurate statistics even the statistics he does use contradict his thesis his explanatory hypotheses are shown to be theoretically and factually wrong the actions of the bengal government of 1943 are looked at in the light of sen s recommendations

food availability entitlements and the chinese famine of 1959 61 food availability decline and sen s entitlement are two leading approaches in understanding causes of famine previous research based on case studies has given independent support to each approach this paper analyses the chinese famine of 1959 61 by considering jointly the urban bias and the decline in food availability as causes we find that both factors contributed significantly to the increase in death rates during this famine to our knowledge this paper is the first econometric study to assess the importance of famine causes using the entitlement approach

signaling character in electoral competition we study a one dimensional hotelling downs model of electoral competition with the following innovation a fraction of candidates have character and are exogenously committed to a campaign platform this is unobservable to voters character is desirable and a voter s utility is a convex combination of standard policy preferences and her assessment of a candidate s character this structure induces a signaling game between strategic candidates and voters since a policy platform affects voters utilities not only directly but also indirectly through inferences about a candidate s character the model generates a number of predictions starting with a failure of the median voter theorem jel d72 d82

market power screens willingness to pay what is the best way to reward innovation while prizes avoid deadweight loss intellectual property selects high social surplus projects optimal innovation policy thus trades off the ex ante screening benefit and the ex post distortion it solves a multidimensional screening problem in the private information held by the innovator research cost quality and market size of the innovation the appropriate degree of market power is never full monopoly pricing and is determined by measurable market characteristics the inequality and elasticity of innovation supply making the analysis open to empirical calibration the framework has applications beyond ip policy to the optimal pricing of platforms or the optimal procurement of public infrastructure

collaborative promotion of technology standards and the impact on innovation industry structure and organizational capabilities evidence from modern patent pools this study explores the impact of modern patent pools inter organizational collaborative arrangements for promoting the adoption of technology standards on the rate of follow on innovations based on pooled technologies the vertical structure of associated industries and organizational capabilities of noncollaborating firms on one hand the formation of modern pools can boost follow on innovation by lowering the search negotiation and licensing costs associated with pooled standards on the other hand modern pools may decrease the incentives to invest in follow on innovations because of cannibalization risks and grant back provisions to the extent that modern pools succeed in establishing a dominant standard their collaborative nature and their reliance on markets for technology can reduce technological uncertainty and appropriation hazards hence triggering vertical disintegration in related industries moreover by establishing a dominant standard modern pools can effectively diminish the relati

patents and innovation evidence from economic history abstract what is the optimal system of intellectual property rights to encourage innovation empirical evidence from economic history can help to inform important policy questions that have been di

patent pools and innovation in substitute technologies evidence from the 19th century sewing machine industry patent pools which combine complementary patents of competing firms are expected to increase overall welfare but potentially discourage innovation in substitutes for the pool technology this article exploits a new historical data set on changes in patenting and firm entry for a clearly defined pool technology and substitutes in the 19th century sewing machine industry this analysis reveals a substantial increase in innovation for an albeit technologically inferior substitute technology historical evidence suggests that the creation of a pool diverted innovation toward an inferior substitute technology by creating differential license fees and litigation risks

coordinating research through research joint ventures abstract in a simple model we show that a joint venture can implement the rates of investment that maximize joint profit when firms research abilities are private information this can be done with budget balance even though there are participation constraints there is no conflict between budget balance and participation constraints because firms payoffs can depend on ex post signals of abilities the conflict between budget balance and participation constraints is restored when both abilities and rates of investment are unobservable we give a condition under which the profit maximizing rates of investment can be implemented if we relax budget balance

agricultural technologies for climate change in developing countries policy options for innovation and technology diffusion climate has obvious direct effects on agricultural production the reverse is more apparent than ever as greenhouse gas emissions from agriculture are tallied the development and effective diffusion of new agricultural practices and technologies will largely shape how and how well farmers mitigate and adapt to climate change this adaptation and mitigation potential is nowhere more pronounced than in developing countries where agricultural productivity remains low poverty vulnerability and food insecurity remain high and the direct effects of climate change are expected to be especially harsh creating the necessary agricultural technologies and harnessing them to enable developing countries to adapt their agricultural systems to changing climate will require innovations in policy and institutions as well potential constraints to innovation involve both the private and public sectors in both developing and developed countries the process of transferring agricultural innovations across agroecological and climatic zones is often subject to agronomic constraints often the most binding constraints occur at the adoption stage with several factors that potentially impede poor farmers access to and use of new technologies based on discussions of these constraints we derive six policy principles and use these principles to suggest several specific investments and policy priorities

market failures and public policy industrial organization studies the exercise and control of market power to this purpose it builds models that capture the essence of the situation the predictions of the model can then be tested econometrically and possibly in the lab or the field in the end the reasonableness of and robustness to modeling assumptions and the quality of empirical fit determine how confident economists are in making recommendations to public decision makers for intervention and to companies for the design of their business model industrial organization has a long tradition first theoretical with the work of french engineer economists antoine augustin cournot 1838 and jules dupuit 1844 then policy oriented with the enactment of the sherman act 1890 and subsequent legislation then descriptive with the studies of the harvard school structure conduct performance comforting and refining the antitrust drive and finally skeptical with the chicago school the chicago school correctly pointed out the lack of underlying theoretical doctrine and went on to cast doubt on the whole edifice it however did not develop an alternative antitrust doctrine perhaps because

the role of patents in information and communication technologies a survey of the literature during the last few decades the number of patents in information and communication technologies has increased considerably an increasing number of patents and the associated fragmentation of ip rights have generated a series of potentially problematic consequences patent thickets royalty stacking the emergence of patent assertion entities increased patent litigation particularly around standard essential patents and the difficulties with defining fair reasonable and nondiscriminatory licensing terms are some of the most debated issues in the literature that we review in this paper we devote a specific section of our survey to patent quality currently one of the most debated issues surrounding the patent system in our analysis we mix theoretical and empirical arguments with a more policy oriented reasoning this allows us to better position the different issues in the relevant political and economic context

product boundary vertical competition and the double mark up problem we develop a model in which a main product called product a provides a performance quality z by itself whereas a complementary product called product b is useless by itself but enhances the main product s performance quality to q z this asymmetric complementarity gives rise to the following results first if z is relatively small then firms a and b behave as if the products are symmetrically complementary with the usual double marginalization problem second if z is sufficiently large then firms a and b price their products as if they are independent third over a certain range of intermediate z no pure strategy nash equilibrium exists

do patents work thickets trolls and antibiotic resistance this paper connects ideas from recent literature on the economics of intellectual property ip to address the question did the strengthening and broadening of ip rights from important patent policy changes in the us promote greater innovation the analysis rests on the theory of cumulative innovation which shows that if ip rights on a pioneer invention extend to follow on research and impediments to contracting exist then strengthening patents can actually reduce overall innovation recent empirical studies are consistent with the theory patents can significantly deter follow on research in complex technology areas where contracting is difficult computers electronics telecommunications but not in drugs chemicals and human genes i outline remedies from court decisions and antitrust policy for addressing inefficiencies from patent trolling patent thickets and the anti commons of fragmented ownership i then apply the analysis to the antibiotics market drawing on recent research to examine how patent and competition policies can be used to improve incentives for drug development in the battle against antibiotic resistance the literature provides persuasive evidence that the policy changes overreached in broadening and strengthening ip rights and reveals important patent reforms for improving the effectiveness of patent systems in the us and canada

should good patents come in small packages a welfare analysis of intellectual property bundling abstract intellectual property owners often hold the rights to several patents each of which is essential to make or use a product we compare the welfare properties of package licenses under which a licensee pays the same fee regardless of the number of technologies licensed with component licenses under which each technology is licensed separately and there is no quantity discount a central finding is that a long term package license can induce incentives to invent around patents and invest in complementary assets that are closer to their socially optimal levels than are those induced by a long term component license we also identify settings in which a short term license is a partial substitute for a package license and a prohibition on package licensing induces parties to adopt contracts that result in less efficient complementary investment because of hold up

responders versus non responders a new perspective on heterogeneity this paper considers the implications of a particular type of heterogeneity one which characterizes a large number of economic environments but that has not received any systematic treatment in the literature the authors refer to this heterogeneity as responders versus nonresponders the paper begins by providing a general framework for the analysis of environments characterized by this heterogeneity and then shows how this framework can be used to help understand a wide variety of economic environments particular applications considered are near rationality network externalities and models of reputation copyright 1991 by royal economic society

large demographic shocks and small changes in the marriage market between 1958 and 1961 china experienced one of the worse famines in her history birth rates fell during these years and recovered immediately afterwards the famine also adversely affected the health of these cohorts this paper provides non parametric estimates of the total effects of the famine on the marital behaviour of famine affected cohorts in the rural areas of sichuan and anhui these reduced from estimates incorporate general equilibrium and heterogeneous treatment effects two important components of equilibrium marital behaviour next the paper uses a structural model of the marriage market the choo siow model to decompose observed marital outcomes into quantity and quality effects of the famine the structural estimates show that the famine substantially reduced the marital attractiveness of the famine born cohort the conclusion is that the small observed changes in marriage rates of the famine born cohorts are due to a substantial decline in their marital attractiveness controlling for changes in educational attainment does not change the conclusion

estimating the long term impact of the great chinese famine 1959 61 on modern china summary this research analyzes the long term impact of the great chinese famine 1959 61 on the modern chinese economy and shows that areas in which famine was most severe have significantly lower per capita gdp today the great famine coincided with the chinese communist party s industrialization and agriculture modernization plan the great leap forward glf to remove omitted variable and endogeneity problems a unique relationship between the communist army s takeover of mainland china 1946 50 and the degree to which subnational leadership was willing to enforce glf policies to the detriment of rural citizens well being is exploited via instrumental variable iv estimation specifically areas liberated later had a higher density of zealous administrators by the start of the glf in 1958 and in turn experienced stricter enforcement of glf policies which resulted in greater famine severity as a result this research finds a relatively pronounced impact of politically triggered famine captured by the iv approach which strengthens the growing outlook that famine is a consequence of inadequate food entitlement as opposed to being simply food shortages

rigidity of social systems the tendency for the members of a corporation or government to be resistant to change is explored in a model that encompasses two endemic features of such systems first the social system is modeled as a hierarchy and implicit within it is a selection process that determines who advances to higher levels second an agent s behavior is partially determined by imitating those who have risen in the ranks a behavioral norm of being rigid is found to be more prevalent and robust than one of being flexible a more volatile environment may also induce agents to be more resistant to change admirandi sed imitandi to be admired but not imitated st augustine

entry for buyout the possibility of buying out an entrant has an important effect on entry deterrence entrants can blackmail the incumbent by threatening to keep prices low and buyout can make entry profitable which otherwise would not be in particular the entry deterrence policy of excess capacity to reduce the post entry price can not only fail but work against the incumbent the presence of multiple oligopolistic incumbents or multiple potential entrants however can discourage entry for buyout the long literature on entry deterrence has always assumed that if entry is made unprofitable no entry will occur but as followers of professional football may have suspected a clearly unprofitable competitor might rationally enter a market in the hopes of selling out to the incumbent i will model such a situation and try to show what conditions facilitate entry for buyout in the simplest entry deterrence model the incumbent successfully maintains monopoly by threatening to expand output and cut price after other firms enter but he succeeds only because potential entrants believe the threat if entrants are rational this strategy fails price warfare hurts the incumbent as well as the entrant so the monopolist would let the entrant have a share of profits after entry potential entrants foreseeing the accommodating response ignore the threat deterred entry is a nash equilibrium but not a perfect nash equilibrium it is nash because the entrant chooses to stay out given the incumbent s strategy of cutting prices after entry and the incumbent does not mind committing himself to cutting prices given that entry never occurs a perfect nash equilibrium is a set of strategies that is a nash equilibrium for every proper subgame if the game is started at any of the nodes of the game tree including those off the equilibrium path the strategies the agents pick to maximize their objective function from that node onwards must be part of the equilibrium strategy for the entire game in the subgame which begins after entry has already occurred the incumbent would not choose to cut prices so cutting prices after entry is not part of a perfect equilibrium in the perfect equilibrium entry occurs and is accommodated

moving off the farm land institutions to facilitate structural transformation and agricultural productivity growth in china agriculture has made major contributions to china s economic growth and poverty reduction but the literature has rarely focused on the institutional factors that might underpin such structural transformation and productivity this paper aims to fill that gap drawing on an 8 year panel of 1 200 households in six key provinces it explores the impact of government land reallocations and formal land use certificates on agricultural productivity growth as well as the likelihood of households to exit from agriculture or send family members to the non farm sector it finds that land tenure insecurity measured by the history of past land reallocations discourages households from quitting agriculture the recognition of land rights through formal certificates encourages the temporary migration of rural labor both factors have a large impact on productivity at about 30 percent each mainly by encouraging market based land transfers a sustained increase in non agricultural opportunities will likely reinforce the importance of secure land tenure which is a precondition for successful structural transformation and continued economic attractiveness of rural areas

patent thickets courts and the market for innovation we study how fragmentation of patent rights and the formation of the court of appeals for the federal circuit cafc affected the duration of patent disputes and thus the speed of technology diffusion through licensing we develop a model of patent litigation which predicts faster settlement when patent rights are fragmented and when there is less uncertainty about court outcomes as was associated with the pro patent shift of the cafc we confirm these predictions empirically using a data set that covers patent suits in u s district courts during the period 1975 2000 finally we analyze how fragmentation affects total settlement delay considering both the reduction in dispute duration and the increase in the number of patent negotiations