Rewarding Sequential Innovators: Patents Prizes and Buyouts
Abstract
This paper presents a model of cumulative innovation where firms are heterogeneous in their research ability. We study the optimal reward policy when the quality of the ideas and their subsequent development effort are private information. The optimal assignment of property rights must counterbalance the incentives of current and future innovators. The resulting mechanism resembles a menu of patents that, contrary to the existing literature, have infinite duration and fixed scope, where the latter increases in the value of the idea. Finally, we provide a way to implement this patent menu by using a simple buyout scheme: The innovator commits at the outset to a price ceiling at which he will sell his rights to a future inventor. By paying a larger fee, a higher price ceiling is obtained. Any subsequent innovator must pay this price and purchase its own buyout fee contract.Download Info
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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1650.Length:
Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1650
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- David Encaoua & Dominique Guellec & Catalina Martínez, 2006.
"Patent Systems for Encouraging Innovation: Lessons from Economic Analysis,"
Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers)
halshs-00177614, HAL.
- Encaoua, David & Guellec, Dominique & Martinez, Catalina, 2006. "Patent systems for encouraging innovation: Lessons from economic analysis," Research Policy, Elsevier, vol. 35(9), pages 1423-1440, November.
- Scotchmer, Suzanne, 2009. "Scarcity of Ideas and R&D Options: Use it, Lose it, or Bank it," Competition Policy Center, Working Paper Series qt2p5543p0, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Brennan, Timothy J. & Macauley, Molly & Whitefoot, Kate, 2011. "Prizes, Patents, and Technology Procurement: A Proposed Analytical Framework," Discussion Papers dp-11-21, Resources For the Future.
- Denicolo, Vincenzo & Zanchettin, Piercarlo, 2002. "How should forward patent protection be provided?," International Journal of Industrial Organization, Elsevier, vol. 20(6), pages 801-827, June.
- Ufuk Akcigit & William R. Kerr, 2010.
"Growth Through Heterogeneous Innovations,"
NBER Working Papers
16443, National Bureau of Economic Research, Inc.
- Ufuk Akcigit & William R. Kerr, 2010. "Growth through Heterogeneous Innovations," PIER Working Paper Archive 10-035, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Ufuk Akcigit & William R. Kerr, 2012. "Growth Through Heterogeneous Innovations," Working Papers 12-08, Center for Economic Studies, U.S. Census Bureau.
- 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.
- Mitchell, Matthew & Zhang, Yuzhe, 2012. "Shared Rights and Technological Progress," MPRA Paper 36537, University Library of Munich, Germany.
- Scotchmer, Suzanne & Erkal, Nisvan, 2009. "Scarcity of Ideas and R&D Options: Use it, Lose it or Bank it," Department of Economics, Working Paper Series qt1295k6gg, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Alexandre Almeida & Aurora A.C. Teixeira, 2007. "Does Patenting negatively impact on R&D investment?An international panel data assessment," FEP Working Papers 255, Universidade do Porto, Faculdade de Economia do Porto.
- 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.
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