On the Winner-Take-All Principle in Innovation Races
AbstractWhat is the optimal allocation of prizes in an innovation race? Should the winner take all, or is it preferable that the original inventor shares the market with subsequent independent duplicators? Some recent papers in law and economics have argued that the latter, more permissive solution is socially preferable under mild conditions. We re-examine that issue, arguing that a permissive regime may turn the innovation race into a waiting game, reducing the power of incentives, and may invite socially wasteful duplicative R&D expenditures. In a model that accounts for these effects, the winner-take-all system turns out to be preferable in a broad set of circumstances, especially in highly innovative industries. (JEL: K11, L1, O34) (c) 2010 by the European Economic Association.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by MIT Press in its journal Journal of the European Economic Association.
Volume (Year): 8 (2010)
Issue (Month): 5 (09)
Contact details of provider:
Web page: http://www.mitpressjournals.org/jeea
Find related papers by JEL classification:
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Emeric Henry, 2010.
"Runner-up patents: is monopoly inevitable?,"
Sciences Po publications
info:hdl:2441/c8dmi8nm4pd, Sciences Po.
- Henry, Emeric, 2010.
"Promising the right prize,"
CEPR Discussion Papers
7758, C.E.P.R. Discussion Papers.
- Zhang, Tianle, 2009.
"Patenting in the Shadow of Independent Discoveries by Rivals,"
32917, University Library of Munich, Germany, revised 2011.
- Zhang, Tianle, 2012. "Patenting in the shadow of independent discoveries by rivals," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 41-49.
- Qiang Fu & Jingfeng Lu, 2012. "Micro foundations of multi-prize lottery contests: a perspective of noisy performance ranking," Social Choice and Welfare, Springer, vol. 38(3), pages 497-517, March.
- Fu, Qiang & Lu, Jingfeng & Lu, Yuanzhu, 2012. "Incentivizing R&D: Prize or subsidies?," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 67-79.
- Richard Gilbert, 2011. "A World without Intellectual Property? A Review of Michele Boldrin and David Levine's Against Intellectual Monopoly," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 421-32, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karie Kirkpatrick).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.