a dynamic analysis of licensing the boomerang effect and grant back clauses this article develops an incomplete contract model of the licensing relationship to analyze the dynamic effects of licensing on r d competition in the innovation market and to examine the rationale for often observed grant back clauses of particular concern are how the consideration of future competition distorts the licensing relationship and how the grant back clause can mitigate this distortion i also evaluate the validity of the casual antitrust argument that grant back clauses may adversely affect competition because they reduce the licensee s incentive to engage in r d and thereby limit rivalry in innovation markets

international trade of scarce water abstract recent analyses of the evolution and structure of trade in virtual water revealed that the number of trade connections and volume of virtual water trade have more than doubled over the past two decades and that developed countries increasingly import water embodied in goods from the rest of the world to alleviate pressure on domestic water resources at the same time as demand continues to increase and climate change threatens to alter hydrological cycles water scarcity is a growing problem does research into virtual water trade need to consider water scarcity and differentiate flows out of water scarce regions from flows out of water abundant regions previous studies sum and compare virtual water volumes originating in countries experiencing vastly different degrees of water scarcity we therefore incorporate water scarcity into an assessment of global virtual water flows we use input output analysis to include indirect virtual water flows we find that the structure of global virtual water networks changes significantly after adjusting for water scarcity

multi region input output analysis of co2 emissions embodied in trade the feedback effects energy related co2 emissions embodied in international trade have been widely studied by researchers using the environmental input output framework despite the increasing interest in using the multi regional input output mrio model by researchers few studies have looked into the mechanism of feedback effects we introduce a method called the stepwise distribution of emissions embodied in trade swd eet to reveal how the emissions embodied in trade are absorbed by a country s final demands through a series of allocation steps a country s indirect absorption patterns and its indirect trade balance of emissions from bilateral trade with other countries are also studied based on the proposed method an empirical study using the data of asian economies shows significant differences in the consumption based emission estimates for some economies due to feedback effects through international trade the differences can be largely captured by the first step or the first two steps of the adjustment procedure in the swd eet analysis other findings and some recommendations are also presented

a multi regional input output analysis of the pollution haven hypothesis from the perspective of global production fragmentation pollution haven hypothesis is an important debate on the environmental effects of international trade the pattern of which has been reshaped obviously by global production fragmentation recently the production process is distributed globally and the pollution haven effect of international trade is becoming more complicated for instance intermediate product trade corresponds to the largest share of embodied emissions and the share of emissions induced by the global value chain related trade is increasing gradually the aim of this paper is to make a comprehensive analysis on the pollution haven hypothesis in carbon emissions embodied in three different trade patterns from global bilateral and national perspectives we propose a method to parcel the pollution haven hypothesis in a multi regional input output analysis and discuss the contribution of production fragmentation for global emissions it is found that international production fragmentation generates global emissions savings the intermediate product trade has a negative balance of avoided emissions the final product trade becomes increasingly less environmentally effective during the period 1995 2009 there are significant differences in the environmental effects of different trade patterns for each country

determinants of inter firm technology licensing in the eu this article investigates the determinants of technology licensing focusing on how country specific characteristics affect technology holders incentives to sell their proprietary technologies through licensing alliances an empirical examination of licensing is done using a unique panel data set of licensing transactions involving companies in the eu the strength of intellectual property rights ipr protection the degree of economic freedom the level of country risk and the number of patent granted in the country are found to be important determinants of inter firm technology licensing in addition firms with prior independent experience as a licensor and public companies tend to license technology more

build or buy strategies in the local loop we provide a dynamic model to study how the presence of the option to buy the incumbent local exchange carrier s ilec facilities via local loop unbundling affects the competitive local exchange carriers clecs incentives to build alternative infrastructures we show that an unregulated incumbent sets a rental path for its local loop which delays technology adoption compared to the case in which there is no unbundling we also characterize the equilibrium rental path set by the unregulated incumbent it is prohibitively high at the initial phases when there is no effective threat of entry with alternative technologies and it is decreasing over time in later phases the decrease in the rental price follows the rise of the entrant s opportunity cost of leasing lines we also argue that neither allowing higher prices for unbundled elements over time nor setting a sunset clause would suffice to induce facility based competition by studying the unregulated ilecs decision regarding unbundling we challenge the implicit assumption behind the sunset clauses which is that the ilec would either deny unbundling or charge too high a price for its network elements in the absence of regulation we claim that the ilecs that initially resist unbundling requirements would tend to charge attractive access prices relative to the entrants alternatives for their infrastructure which become less essential over time this abstract was borrowed from another version of this item

royalties vs fees how do firms pay for foreign technology abstract the theoretical determinants of technology licensing contracts have been extensively studied but empirical evidence is scarce we assemble a data set of all the foreign technology licensing agreements entered into by manufacturing firms in india between 1989 and 1993 industry firm and contract characteristics are used to explain differences between the forms of payment in licensing contracts our findings support theoretical arguments licensing contracts are more likely to use royalties when sales are relatively high while increased volatility of sales and greater profitability favor fixed fee contracts we also find that firms are more likely to use output based payments to control the sale and diffusion of r d or brand intensive know how to unaffiliated firms

the role of intermediate trade in the change of carbon flows within china in recent years evaluating the emissions embodied in trade eeit has become an important area of policy and research multiregional input output mrio analysis which links producers and final consumers is a widely used method for quantifying the eeit however the role of intermediate trade in driving changes in the eeit is still not fully incorporated in mrio analysis and as a result poorly understood here we present a framework that separately identifies the drivers of the emissions embodied in the trade of final and intermediate products we implement this framework in a case study in which we analyse the changes in co2 emissions embodied in interprovincial trade in china from 2007 to 2012 we find that the largest changes are a rising final demand which is associated with increased emissions that are to some extent offset by decreasing emissions intensity and changing interregional dependency regionally the rising imports and the growth in final demand in less developed regions in the north and central e g hebei and henan reduced the co2 emissions outsourced by central coastal regions and drove the traded embodied co2 flows between the central and western regions the framework enriches our understanding of the role played by intermediate trade in the relocation of emissions

size r d productivity and decision styles we extend the size innovation debate by incorporating decision making style as a relevant factor in the innovation process we propose that the size of firms affects the scale and quality of product innovation through the adoption of different decision making styles using the literature on cognition we conceptualize decision making style as the degree to which firms rely on analytical information for decision making during the r d process using longitudinal data of spanish firms we show that as firms increase in size they rely more extensively on analytical decision tools for the innovation activity additionally we show that the size of firms is negatively related to product innovation productivity in terms of scale and positively related to the quality and that these relationships are mediated by firms reliance on analytical decision making style we discuss theoretical and managerial implications for innovation research and practice

entry and strategic information display in credit markets in many countries lenders voluntarily provide information about their borrowers to private credit registries a recent world bank survey reveals that the display of a lender s own borrower information is often not reciprocated that is access to these registries does not require the prior provision of proprietary data we argue that incumbent lenders release information about a portion of their profitable borrowers for strategic reasons the reasoning is that the pool of unreleased borrowers becomes characterised by a severe adverse selection problem this prevents the entrants from bidding for all the incumbent s profitable borrowers and reduces their scale of entry

litigation and settlement in patent infringement cases a patent grants its owner the right to sue intruders that have been identified the patentholder must then supervise the market and react in case of infringement his reaction may be to go to court to settle or to accept entry we investigate how intensive the monitoring effort should be and how it will influence the entry decision in a simultaneous game even if the penalty paid by the infringer in case of a finding of liability is high the patentholder may prefer a settlement to a trial the likelihood of entry may increase with the penalty in sequential games regardless who plays first entry occurs comparatively less often than in the simultaneous game

the structure of licensing contracts industrial organization theory has explored several issues related to licensing but empirical analyses are extremely rare we amass a new and detailed dataset on licensing contracts and use it to present some simple facts concerning licensing behavior our analysis reveals robust cross industries differences in several contractual features such as exclusivity cross licensing ex ante versus ex post technology transfers and licensing to related versus unrelated parties we offer an interpretation of these facts based on cross industry variation in the strength of intellectual property rights

the shapley value of resale proof trades abstract this paper studies the shapley value of transferable utility games associated with resale proof trades of information is in the core iff there is exactly one minimal resale proof set a simple expression for is obtained for symmetric games and some bounds are given for in non symmetric cases

from production based to consumption based national emission inventories abstract under the united national framework convention of climate change unfccc countries are required to submit national emission inventories nei to benchmark reductions in greenhouse gas ghg emissions depending on the definition and system boundary of the nei the mitigation options and priorities may vary the territorial system boundary used by the unfccc has been critiqued for not including international transportation and potentially causing carbon leakage to address these issues past literature has argued in favour of using consumption based nei in climate policy this article discusses several issues in moving from the standard production based nei to consumption based nei first two distinct accounting approaches for constructing consumption based nei are presented the approaches differ in the allocation of intermediate consumption of imported products second a consistent method of weighting production based and consumption based nei is discussed this is an extension of the previous literature on shared responsibility to nei third due to increased uncertainty and a wide system boundary it may be difficult to implement consumption based nei directly into climate policy several alternative options for incorporating consumption based inventories into climate policy are discussed

international technology licensing monopoly rents transaction costs and exclusive rights as firms increasingly use licensing to exploit knowledge based assets in global technology markets appropriate structuring of these agreements has become an important line of research inquiry one area that has received less attention is the nature of rights granted in inter firm licensing relationships although it is an important clause that has implications for profit generation from licensing of proprietary assets conceptualizing licensing rights in terms of number of licenses granted and exclusivity rights given to a licensee in a foreign market this paper examines the determinants of these rights based on monopoly rents and transaction costs associated with different types of licensing contracts hypotheses are empirically tested through two studies one based on large us manufacturing firms and the other on a cross national sample of medium sized firms actively involved in international technology licensing results from both studies show a greater propensity to use non exclusive multiple licensing when the licensed technology has greater potential to produce differentiated products or when there is greater threat of substitutive technologies entering the market on the other hand innovative technologies and a higher degree of asset specific investments required of the licensee for the technology are related to the use of single exclusive licensing agreements

a structural decomposition analysis of the emissions embodied in trade abstract the aim of this study is to quantify the driving forces behind the growth of carbon dioxide emissions embodied in trade eet the world input output database is used to estimate eet in 40 countries during 1995 2007 after which a structural decomposition analysis is applied to avoid biases in the results we have used the input output tables in previous year s prices and chained the outcomes in many developed countries the growth of emissions embodied in imports is much higher than the growth of emissions embodied in exports a key reason for this finding is the change in the structure of trade both in intermediate and in final products emerging economies like the bric countries have increased their share in production and trade at the expense of developed countries producers and consumers in developed countries have shifted towards importing a larger share of products from emerging countries this is the distinguishing feature that led to an increase of emissions embodied in imports for developed countries and an increase of emissions embodied in exports for emerging countries these results suggest policy makers to monitor eet more carefully and take the effects of trade on emissions into consideration

a review of recent multi region input output models used for consumption based emission and resource accounting abstract the interest in consumption based emission and resource accounting has grown significantly many studies juxtapose consumer emissions carbon footprint and producer territorial emissions of greenhouse gases in order to demonstrate the effects of trade on the national emission budget to this end a respectable number of studies have been undertaken worldwide in order to estimate emissions embedded in international trade of numerous countries and world regions input output approaches and increasingly multi region input output mrio models are commonly chosen as they provide an appropriate methodological framework for complete carbon footprint estimates at the national and supra national level with increasing processing capabilities of computers and a wider availability of economic accounts environmental accounts and trade data such models are now being implemented on a wide scale after a brief overview of salient single region input output studies i provide an in depth review of the most recent multi region input output models used for the purpose of consumption based environmental accounting the main methodological features and important results are described for around twenty studies covering the years 2007 to 2009 this is followed by a detailed review of studies dealing with uncertainty in mrio analysis an area which has not received a lot of attention so far i conclude that further research is mainly needed in two areas a improvements in data availability and quality and b improvements in the accuracy of mrio modelling

comparing structural decomposition analysis and index to analyze and understand historical changes in economic environmental employment or other socio economic indicators it is useful to assess the driving forces or determinants that underlie these changes two techniques for decomposing indicator changes at the sector level are structural decomposition analysis sda and index decomposition analysis ida for example sda and ida have been used to analyze changes in indicators such as energy use co2 emissions labor demand and value added the changes in these variables are decomposed into determinants such as technological demand and structural effects sda uses information from input output tables while ida uses aggregate data at the sector level the two methods have developed quite independently which has resulted in each method being characterized by specific unique techniques and approaches this paper has three aims first the similarities and differences between the two approaches are summarized second the possibility of transferring specific techniques and indices is explored finally a numerical example is used to illustrate differences between the two approaches

choosing the competition and patent licensing this article examines licensing as a means of choosing the competitors which a patentee monopolist will face in the period after the patent expires the queue of entrants consists of two firms which differ in their relative strengths as competitors for example by size or level of marginal cost by structuring the industry to be composed of weak competitors the incumbent is able to prolong its dominant position in the industry after the patent expires examples are presented in which the evidence suggests that choosing the competition was an important motivation of the licensor s behavior

possibility of relicensing and patent protection abstract we examine the effects of patent protection paying attention to its role of prohibiting relicensing we focus on two questions first whether does the innovator have an incentive of licensing the concealable easily kept secret if not licensed innovation in the case where patent protection is absent second what effects does patent protection have upon the innovator s payoff and the consumers welfare principal findings include the following in the case of nondrastic innovations in the sense of arrow the innovator has an incentive of licensing even without patent protection patent protection generally benefits the innovator but may cause damage to the consumers for large innovations for drastic innovations patent protection has no influence on licensing licensing never takes place regardless of whether it is provided or not

international technology transfer under potential threat of entry a cournot nash framework abstract this paper analyses the possibility of technology transfer from a technologically advanced foreign firm to a domestic firm of a less developed country when the product market is characterized by cournot nash competition the foreign firm is not allowed to enter the home market by a prohibitive tariff but the backward firm may not face any such resistance in the foreign markets this means that technology transfer under this situation involves potential threat of competition from the latecomer it is shown that by designing a suitable payment policy the host country government can induce the foreign firm to transfer the best technology however there are possible equilibria where worse than the best technologies are transferred

the lmdi approach to decomposition analysis a practical guide in a recent study ang energy policy 32 2004 compared various index decomposition analysis methods and concluded that the logarithmic mean divisia index method is the preferred method since the literature on the method tends to be either too technical or specific for most potential users this paper provides a practical guide that includes the general formulation process summary tables for easy reference and examples

impact of licensing on investment and financing of technology development technology innovations continue to be one of the greatest drivers of economic growth realizing the value of such innovations however requires substantial follow on investments in development and commercialization the value of these investments is difficult to capture because of uncertain demand and potential competition this often leads to difficulties in obtaining outside financing for these investments in this paper we explore how licensing contracts can both dissuade other firms from developing alternative technologies and alleviate the financing problem we develop a model in which a firm that invests in the development efforts of an innovation can license its technology to a potential competitor a variety of licensing possibilities is considered including fixed fees royalty schedules and two part licenses consisting of an up front payment and a capped royalty schedule when the firm has no financial constraint a royalty schedule that depends on realized demand dominates a fixed fee per license when investment funds are constrained a royalty cap license with an up front payment can serve as a source of financing we also study the investment problem conditional on the licensing and financing decisions

deterrence by market sharing a strategic incentive for licensing the potential of an incumbent firm to retain its dominant position in a market is a focal point of the modem theory of industrial organization a recent literature examines this issue for markets in which challengers threaten an incumbent s position by engaging in research for a new technology richard gilbert and david newbery 1982 show that an incumbent firm with a firstmover advantage will preempt potential entrants by inventing a new technology slightly earlier than would its rivals in a stochastic r d therefore its introduction does not alter the decision to research when the pre innovation market is characterized by an incumbent and potential entrants stephen salant 1984 shows that licensing ex post to innovation can alter the research decision as anticipation of the returns from future licensing encourages research by the entrant as a counterpoint to the salant result i find that licensing ex ante to research may discourage further research by the entrant indeed this strategic incentive for licensing may be so strong as to persuade the incumbent as well as the entrant to terminate research activity to isolate this incentive for licensing from the one discussed by salant a simple model is constructed in which licensing of future technologies is not desirable anecdotal evidence suggests that the strategic incentive does lead innovators in some markets to license their technologies examples of this information sharing are prevalent in markets where technological change is rapid in the 1940 s standard oil of new jersey discovered a process for synthetic rubber it traded patent rights on this process for a synthetic oil production process discovered by farben a german rubber company in both the synthetic oil and synthetic rubber markets rival companies were department of economics scarsborough college university of toronto toronto ontario canada m5s lal i thank jon cohen and ron saunders for discussions that inspired this paper i am also grateful to yehuda kotowitz andy mclennan jennifer reinganum ralph winter myma wooders two anonymous referees and seminar participants at the university of toronto for helpful comments on earlier drafts

the effects of direct trade within china on regional and national co2 emissions curbing national carbon emissions and clarifying regional carbon reduction responsibility are two challenges faced by china both of which are influenced by interregional trade to exclude the influence of trade balance this paper proposes a methodology to parcel the pollution haven hypothesis into a multi regional input output model applies it to a longer time gap which is made up of two representative periods of chinese economy 1997 2002 and 2002 2007 and clarifies the provincial and sectoral contributions to national emissions we find that 1 embodied co2 emissions first remain relatively stable and then increase sharply for the two periods and the changing trends are mainly determined by the decreasing carbon intensity and the expanding trade scale respectively 2 with the secondary industry as the main contributor regional carbon spillover is mainly concentrated in the coastal provinces but it contributes to an increase of co2 emissions in the central and western regions 3 the coastal and inland provinces contribute to the increase of national carbon emissions through interregional imports and exports respectively but the pollution haven hypothesis is not obvious and is only observed in 2002

imitative innovation and international joint ventures a dynamic analysis abstract in this paper we deal with some dynamic issues of international joint venture in the context of a developing country we provide a rationale for international joint venture formation as well as its subsequent instability where instability is interpreted as payoff readjustments between the partners in the venture although the joint venture is formed in response to government restrictions on foreign equity holdings in the first period its subsequent instability is caused by both the change in government policy as well as the outcome of imitative technological innovation undertaken by the host partner it is also shown that uncertainty about the government policy in the second period plays an important role in the formation of joint venture in the first period

strategic entry deterrence in analyzing deterrence of large scale entry two classes of entry barriers may be distinguished an innocent entry barrier is unintentionally erected as a side effect of innocent profit maximization in contrast a strategic entry barrier is purposely erected to reduce the possibility of entry two types of innocent barriers may also be distinguished a postentry absolute advantage has the property that if entry did occur the established firm would be at a profit advantage over the entrant examples are superior technology or product design patents and lower input prices a preentry asymmetry advantage arises from the fundamental preentry asymmetry between established firm and potential entrant before the entrant makes his entry decision the established firm has already committed resources this prior existence gives first move advantages the preentry asymmetry is independent of symmetry or asymmetry in the rules the equilibrium concept of the postentry game that might ensue even if the postentry game will be played according to nash cournot or entrant as leader rules the preentry leadership

input output analysis of co2 emissions embodied in trade competitive versus non competitive imports energy related co2 emissions embodied in international trade have been widely studied by researchers using the environmental input output framework in the literature two different approaches to deal with emissions embodied in a country s imports can be found one of the approaches is based on the assumption of competitive imports while the other is based on the assumption of non competitive imports we show that the implications of the results obtained using different imports assumptions are not the same the approach using the competitive imports assumption gives estimates larger than those obtained using the non competitive import assumption the differences between the two embodiment estimates come from the transition of embodied emissions in china s imports for intermediate consumption to those in china s exports this explains why relatively high estimates of co2 emissions embodied in china s exports are reported in several recent studies appearing in energy policy

accounting for nitrogen in denmark a structural decomposition analysis abstract this paper examines the environmental economic cycle for nitrogen in denmark based on nitrogen input and output from different economic sectors an input output model is employed together with a nitrogen mass balance to apportion total nitrogen loading by final demand and estimate export and import of nitrogen from foreign trade the changes in agricultural and industrial nitrogen loading from the mid 1960s to the late 1980s are broken down into changes related to different technological and economic factors the analysis reveals that technological change intensified agricultural production and economic growth especially rising exports are the key factors structural shifts changes in commodity mix in the household and production sectors generally being of less importance

cross licensing of competing patents as a facilitating device this paper hypothesizes that when their products are imperfect substitutes firms can promote collusion by cross licensing their competing patents cross licensing is shown to enhance the degree of collusion achieved in a repeated game by credibly introducing the threat of increased rivalry in the market for each firm s product the paper then examines the consistency of the theory developed with the available evidence antitrust implications of the practice of cross licensing of competing patents are discussed

global primary energy use associated with production consumption and international trade presented in this study is a comprehensive analysis for energy use of different economic entities in global supply chains including the exploiter producer consumer intermediate trader and final trader the systems input output analysis method is adopted to trace the direct and indirect energy use associated with both intermediate production and final consumption activities in the economic system in the world economy 15 of the energy use embodied in trade turns out to be induced by final consumption and 85 is attributed to intermediate production different trading patterns for different economies are identified with the separation between energy trade for intermediate production and that for final consumption for japan with a production oriented trading pattern intermediate trade should be a top priority in local trade structure adjustment while final trade needs more attention for the government in the united states as the country is in a consumption oriented trade pattern this analysis aims to provide an in depth insight into energy sustainability as well as a sound scientific reference for policy making at the regional national and global scale

weak entrants are welcome abstract this paper investigates the decision problem of an incumbent firm confronted by both a weak and strong entrant in a differentiated market suppose that the incumbent can deter entry of the weak firm but cannot deter entry of the strong firm by itself then the incumbent may allow entry of the weak firm and use it to alter the strong firm s entry decision the present paper formalizes this idea and it sheds new light on the fact that domestic firms are sometimes able to block strong foreign firms after trade liberalization the idea also explains why a dominant firm lets fringe firms be in the market

milestone payments or royalties contract design for r d licensing we study how innovators can optimally design licensing contracts when there is incomplete information on the licensee s valuation of the innovation and limited control over the licensee s development efforts a licensing contract typically contains an up front payment milestone payments at successful completion of a project phase and royalties on sales we use principal agent models to formulate the licensor s contracting problem and we find that under adverse selection the optimal contract structure changes with the licensee s valuation of the innovation as the licensee s valuation increases the licensor s optimal level of involvement in the development directly or through royalties should decrease only a risk averse licensor should include both up front and milestone payments moral hazard alone is not detrimental to the licensor s value but may create an additional value loss when combined with adverse selection our results inform managerial practice about the advantages and disadvantages of the different terms included in licensing contracts and recommend the optimal composition of the contract

unbundling the local loop abstract we study competition for high bandwidth services in the telecommunications industry by introducing the possibility of unbundling the local loop where leased lines permit the entrant to provide services without building up its own infrastructure we use a dynamic model of technology adoption and study the incentives of the entrant to lease loops and compete service based and or to build up a new and more efficient infrastructure and compete facility based given the rental price we show that the incumbent sets too low a rental price for its loops hence the entrant adopts the new technology too late from a social welfare perspective the distortion may appear not only on the timing of technology adoption but also on the type quality of the new technology to be adopted we also show that while regulating the rental price may suffice to achieve socially desirable outcomes a sunset clause does not improve social welfare

trust and the market for technology abstract conditional on the decision to enter the market for immature technology we test for the effects that trust proxied by the context in which the negotiating parties first met has on the likelihood that these negotiations are successful using survey responses from 860 university firm and firm firm technology transactions we find that trust matters parties with high levels of trust i e know each other from a previous business are between 6 and 23 per cent more likely to conclude a transaction compared with those with low levels of trust i e cold callers we also find that patents can effectively substitute for a lack of trust and that trust is more important in upstream stages basic or applied science

r d rivalry with licensing or imitation the authors study the rivalry between two firms to develop an innovation in a dynamic setting that allows for post development dissemination of the innovation such as licensing or imitation this dissemination may cause the noninnovating firm to benefit from the discovery when this occurs conventional results in the economics of r d no longer need apply they find that industry leaders will tend to develop minor innovations but will develop major innovations only if imitation is difficult copyright 1987 by american economic association

preemptive patenting and the persistence of monopoly this article takes a different tack and inquires whether institutions such as the patent system create opportunities for firms with monopoly power to maintain their monopoly power the results apply to other situations such as brand identification spatial location and capacity expansion which share the characteristic that early or preemptive actions may lower the returns to potential competitors

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

cooperation in r d the case of patent infringement agreements abstract this paper provides an insurance based argument behind patent infringement agreements pia such agreements constitute a form of cooperation in an otherwise non cooperative environment we develop a model where firms initially hold certain patents and undertake further r d by pursuing the latter they face a positive probability of infringing the patents held by the other a prior infringement agreement generates a binding contract so that such infringements would go unpunished if the infringing probability is not too low firms would have incentive to sign an agreement and sacrifice the monopoly option but this depends on the information structure about the patent infringement and search costs such a prior agreement is then compared and contrasted with a suitably designed ex post contract

strategic disclosure of meaningful information to rival i study a model of strategic disclosure of a private signal to a rival in the presence of a payoff externality in the model two agents forecast the unknown true state of a future period specifically the quality of the signal is also private information hence which quality of signal is revealed for which incentive is the main question of interest i show that even when disclosure is costly the revealing equilibrium where an agent voluntarily reveals his signal can exist and it should be a monotone equilibrium asymmetry between the penalty for an incorrect forecast and the reward for a correct forecast is a necessary condition for the existence of this revealing equilibrium if the penalty is larger than the reward the unique revealing equilibrium is a separating equilibrium where only the low quality signal is disclosed in order to induce the rival s imitation on the other hand if the reward is much larger than the penalty the unique revealing equilibrium is a pooling equilibrium where the signal is always revealed in order to induce the rival s deviation if the reward is not much larger than the penalty no revealing equilibrium is robust to a costly disclosure jel d81 d82

how to license intangible property we examine the optimal licensing strategy of a research lab selling to firms who are product market competitors we consider an independent lab as well as a research joint venture we show that 1 demands are interdependent and hence the standard price mechanism is not the profit maximizing licensing strategy 2 the seller s incentives to develop the innovation may be excessive 3 the seller s incentives to disseminate the innovation typically are too low 4 larger ventures are less likely to develop the innovation and more likely to restrict its dissemination in those cases where development occurs and 5 a downstream firm that is not a member of the research venture is worse off as a result of the innovation

technology licensing r d and welfare this paper sets up a three stage r d technology licensing and output oligopoly game in which only one of the firms undertakes a cost reducing r d and may license the developed technology to the others by means of a two part tariff i e a per unit royalty and an upfront fee contract it is found with surprise that if the licensor firm s r d efficiency is high the availability of licensing subdues the firm s r d incentive leading to a lower social welfare level this result implies that a government has to be cautious when encouraging technology licensing among firms

assigning property rights to radio spectrum users why did fcc license auctions take 67 years abstract while leo herzel 1951 and ronald coase 1959 persuasively argued for auctioning licenses issued by the federal communications commission fcc not until 1993 did the u s congress grant the fcc authority to assign wireless operating permits via competitive bidding why were auctions with obvious efficiency and equity advantages so long in coming why were comparative hearings in the public interest first abandoned as assignment tools in 1981 not for auctions but for lotteries and why were radio and tv licenses pointedly excluded from auctions four factors the special interest of regulators in influencing broadcasting content the limits placed on explicit program regulation by the u s constitution the recent increase in the relative economic importance of nonbroadcast wireless services and the agency problem embedded in central planning are used to explain both the political stability of economically inefficient licensing methods and recent reforms

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

optimal patents with compulsory licensing this paper examines the use of compulsory lincensing as a policy to combat the monopoly problem associated with the patent system it introduces the notion of an optimal patent one where the patent life and the licensing royalty rate are both determined optimally under certain simplifying assumptions it is shown that the optimal patent will have an indefinite life for both process and product innovations some preliminary calculations suggest that the use of compulsory licensing may lead to substantial welfare improvements even if the patent life is left unchanged at 17 years

obtaining strategic advantage from being imitated when can encouraging clones pay an important business strategy research theme concerns finding ways to minimize competition faced by the firm this paper however focuses on a different set of situations the model developed suggests that an innovator s best strategy may be to encourage clones of its product when a network externality is present key factors to consider in assessing whether encouraging cloning is the innovator s best strategy are 1 the benefit to be derived in terms of added user base contributed by the clone sales traded off against 2 the unit sales that will be lost to the clones these factors in turn depend upon the strength of the network effect and the degree to which the innovator s product quality is perceived by consumers to be superior to the clone s the model further suggests that both the innovator and clone earn their highest payoffs when the clone takes the lead in price setting i e when the clone establishes its own price by considering for each price it might set how the innovator will react to that price and the innovator as price follower responds to the price the clone chooses the paper demonstrates that the clone leader innovator follower situation represents the unique nash equilibrium in price setting strategies a central implication is that when operating in a network externality environment instead of a problem to be avoided clones may be valuable assets to an innovating firm building up the user base for the innovator s technology by bringing lower valuing consumers into the market which in turn makes the innovator s product more attractive to high and medium valuing purchasers thus when the above described conditions hold being cloned can be more profitable for an innovating firm than dominating the market alone

shirking sharing risk and shelving the role of university license contracts abstract in this paper we develop a theoretical model of university licensing to explain why university license contracts often include payment types that differ from the fixed fees and royalties typically examined by economists our findings suggest that milestone payments and annual payments are common because moral hazard risk sharing and adverse selection all play a role when embryonic inventions are licensed milestones address inventor moral hazard without the inefficiency inherent in royalties the potential for a licensee to shelve inventions is an adverse selection problem which can be addressed by annual fees if shelving is unintentional but may require an upfront fee if the firm licenses an invention with the intention to shelve it whether the licensing contract prevents shelving depends in part on the university credibly threatening to take the license back from a shelving firm this supports the rationale for bayh dole march in rights but also shows the need for the exercise of these rights can be obviated by contracts

optimal patenting and licensing of financial innovations recent court decisions starting with the state street decision in 1998 allow business methods to be patentable and now give financial institutions the option to seek patent protection for financial innovations this new patentability paradigm and the heterogeneity of characteristics associated with financial innovations pose an immediate decision problem for senior management what to patent we present a parsimonious decision framework that answers this question we show that for innovations with certain characteristics it is optimal not to patent even if the option of patenting and licensing is available our model emphasizes the role of embedded real options that arise from certain types of financial innovations the model provides an explanation of observed patenting behavior of financial institutions and the success of a wide class of innovations including swaps credit derivatives and pricing algorithms

reputational spillovers innovation licensing and entry abstract adoption of a new product by a multiproduct finn may affect all its sales by altering its reputation as an innovator if adopting a success has a halo effect that enhances the adopter s reputation then an inventor s licensing profit exceeds monopoly profit from the new product if adopting a failure has a black eye effect that damages the adopter s reputation then an inventor s licensing profit is maximized by a fixed fee not an auction when both effects are present an inventor licenses new products that are likely to succeed but enters with those that are likely to fail