Scarcity of Ideas and R&D Options: Use it, Lose it or Bank it
AbstractWe investigate rewards to R&D in a model where substitute ideas for innovation arrive to random recipients at random times. By foregoing investment in a current idea, society as a whole preserves an option to invest in a better idea for the same market niche, but with delay. Because successive ideas may occur to different people, there is a conflict between private and social optimality. We characterize the welfare-maximizing reward structure when the social planner learns over time about the arrival rate of ideas, and when private recipients of ideas can bank their ideas for future use. We argue that private incentives to create socially valuable options can be achieved by giving higher rewards where "ideas are scarce."
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.
Bibliographic InfoPaper provided by Department of Economics, Institute for Business and Economic Research, UC Berkeley in its series Department of Economics, Working Paper Series with number qt1295k6gg.
Date of creation: 12 Aug 2009
Date of revision:
Contact details of provider:
Postal: F502 Haas, Berkeley CA 94720-1922
Phone: (510) 642-1922
Fax: (510) 642-5018
Web page: http://www.escholarship.org/repec/iber_econ/
More information through EDIRC
Other versions of this item:
- Nisvan Erkal & Suzanne Scotchmer, 2009. "Scarcity of Ideas and R&D Options: Use it, Lose it or Bank it," NBER Working Papers 14940, National Bureau of Economic Research, Inc.
- Erkal, Nisvan & Scotchmer, Suzanne, 2009. "Scarcity of Ideas and R&D Options: Use it, Lose it, or Bank it," Berkeley Olin Program in Law & Economics, Working Paper Series qt74c709qr, Berkeley Olin Program in Law & Economics.
- K00 - Law and Economics - - General - - - General (including Data Sources and Description)
- L00 - Industrial Organization - - General - - - General
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property Rights
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gerard Llobet & Hugo Hopenhayn & Matthew Mitchell, 2003.
"Rewarding Sequential Innovators: Prizes, Patents and Buyouts,"
Levine's Working Paper Archive
618897000000000682, David K. Levine.
- Hugo Hopenhayn & Gerard Llobet & Matthew Mitchell, 2006. "Rewarding Sequential Innovators: Prizes, Patents, and Buyouts," Journal of Political Economy, University of Chicago Press, vol. 114(6), pages 1041-1068, December.
- Llobet, G. & Hopenhayn, H. & Mitchell, M., 2000. "Rewarding Sequential Innovators: Prizes, Patents and Buyouts," Papers 0012, Centro de Estudios Monetarios Y Financieros-.
- Gerard Llobet & Hugo Hopenhayn & Matthew F. Mitchell, 2000. "Rewarding sequential innovators: prizes, patents and buyouts," Staff Report 273, Federal Reserve Bank of Minneapolis.
- Weeds, Helen, 2002.
"Strategic Delay in a Real Options Model of R&D Competition,"
Review of Economic Studies,
Wiley Blackwell, vol. 69(3), pages 729-47, July.
- Helen Weeds, 2002. "Strategic Delay in a Real Options Model of R&D Competition," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 729-747.
- Weeds, H., 2000. "Strategic Delay in a Real Optimna Model of R&D Competition," The Warwick Economics Research Paper Series (TWERPS) 576, University of Warwick, Department of Economics.
- Wright, Brian Davern, 1983. "The Economics of Invention Incentives: Patents, Prizes, and Research Contracts," American Economic Review, American Economic Association, vol. 73(4), pages 691-707, September.
- Ted O'Donoghue & Suzanne Scotchmer & Jacques-François Thisse, 1998. "Patent Breadth, Patent Life, and the Pace of Technological Progress," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(1), pages 1-32, 03.
- Nisvan Erkal, 2003.
"The Decision to Patent, Cumulative Innovation,and Optimal Policy,"
Department of Economics - Working Papers Series
877, The University of Melbourne.
- Erkal, Nisvan, 2005. "The decision to patent, cumulative innovation, and optimal policy," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 535-562, September.
- Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
- Choi, J.P., 1991.
"Dynamic R & D Competition Under "Hazard Rate" Uncertainty,"
1991_10, Columbia University, Department of Economics.
- Jay P. Choi, 1991. "Dynamic R&D Competition under "Hazard Rate" Uncertainty," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 596-610, Winter.
- Matthew Mitchell, 2000. "Rewarding Sequential Innovators: Patents Prizes and Buyouts," Econometric Society World Congress 2000 Contributed Papers 1650, Econometric Society.
- McDonald, Robert & Siegel, Daniel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, MIT Press, vol. 101(4), pages 707-27, November.
- Erkal, Nisvan & Scotchmer, Suzanne, 2007.
"Scarcity of Ideas and Options to Invest in R&D,"
Competition Policy Center, Working Paper Series
qt4s01d7md, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Nisvan Erkal & Suzanne Scotchmer, 2008. "Scarcity of Ideas and Options to Invest in R&D," Department of Economics - Working Papers Series 1035, The University of Melbourne.
- Erkal, Nisvan & Scotchmer, Suzanne, 2007. "Scarcity of Ideas and Options to Invest in R&D," Department of Economics, Working Paper Series qt2hq9s5kg, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- repec:fth:coluec:549 is not listed on IDEAS
- Vincenzo Denicolo & Luigi Alberto Franzoni, 2004. "Patents, Secrets, and the First-Inventor Defense," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(3), pages 517-538, 09.
- Scotchmer, Suzanne, 2013. "Patents in the University: Priming the Pump and Crowding Out," TSE Working Papers 13-421, Toulouse School of Economics (TSE).
- Christian Riis & Xianwen Shi, 2012. "Sequential Innovation and Optimal Patent Design," Working Papers tecipa-447, University of Toronto, Department of Economics.
- Zhang, Tianle, 2012.
"Patenting in the shadow of independent discoveries by rivals,"
International Journal of Industrial Organization,
Elsevier, vol. 30(1), pages 41-49.
- Zhang, Tianle, 2009. "Patenting in the Shadow of Independent Discoveries by Rivals," MPRA Paper 32917, University Library of Munich, Germany, revised 2011.
- Suzanne Scotchmer, 2011. "Comment on "Funding Conditions, the Public-Private Portfolio and the Disclosure of Scientific Knowledge"," NBER Chapters, in: The Rate and Direction of Inventive Activity Revisited, pages 103-105 National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff).
If references are entirely missing, you can add them using this form.