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A Bayesian Real Option Approach to Patents and Optimal Renewal Fees

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Author Info

  • Marc Baudry

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)

  • Béatrice Dumont

    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen)

Abstract

This article aims at estimating the optimal profile of renewal fees patent offices should implement. It is at the crossroad of two strands of literature. The first strand is the theoretical literature analysing renewal fees as an optimal revelation mechanism. The second strand is the econometric literature developing real option models of patent renewal decisions to assess the value of patents. Using data from the French patent office, we find that there is little room to lower the social cost of patents without affecting the monetary incentives to apply for a patent and innovate. We show that a menu of optimally defined profiles helps to further discriminate among patents.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number hal-00419330.

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Date of creation: 23 Sep 2009
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Handle: RePEc:hal:wpaper:hal-00419330

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References

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  1. Patrick Bolton & Christopher Harris, 1999. "Strategic Experimentation," Econometrica, Econometric Society, Econometric Society, vol. 67(2), pages 349-374, March.
  2. Crampes, Claude & Langinier, Corinne, 2000. "Information Disclosure in the Renewal of Patents," Staff General Research Papers, Iowa State University, Department of Economics 10461, Iowa State University, Department of Economics.
  3. Gans Joshua S & King Stephen P & Lampe Ryan, 2004. "Patent Renewal Fees and Self-Funding Patent Offices," The B.E. Journal of Theoretical Economics, De Gruyter, De Gruyter, vol. 4(1), pages 1-15, July.
  4. Gaétan de Rassenfosse & Bruno Van Pottelsberghe, 2008. "On the Price Elasticity of Demand for Patents," Working Papers ECARES, ULB -- Universite Libre de Bruxelles 2008_031, ULB -- Universite Libre de Bruxelles.
  5. Marc Baudry & Béatrice Dumont, 2006. "Patent Renewals as Options: Improving the Mechanism for Weeding Out Lousy Patents," Review of Industrial Organization, Springer, Springer, vol. 28(1), pages 41-62, 02.
  6. Giuseppe Moscarini & Lones Smith, 2001. "The Optimal Level of Experimentation," Econometrica, Econometric Society, Econometric Society, vol. 69(6), pages 1629-1644, November.
  7. Bosworth, D L, 1978. "The Rate of Obsolescence of Technical Knowledge-A Note," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 26(3), pages 273-79, March.
  8. Cox, John C. & Ross, Stephen A. & Rubinstein, Mark, 1979. "Option pricing: A simplified approach," Journal of Financial Economics, Elsevier, Elsevier, vol. 7(3), pages 229-263, September.
  9. Kelly, David L. & Kolstad, Charles D., 1999. "Bayesian learning, growth, and pollution," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 23(4), pages 491-518, February.
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Cited by:
  1. Danguy, Jérôme & van Pottelsberghe de la Potterie, Bruno, 2010. "Cost-Benefit Analysis of the Community Patent," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7631, C.E.P.R. Discussion Papers.
  2. Rudyk, Ilja, 2012. "The License of Right, Compulsory Licensing and the Value of Exclusivity," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 415, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  3. Gaetan de Rassenfosse & Bruno van Pottelsberghe de la Potterie, 2013. "The Role Of Fees In Patent Systems: Theory And Evidence," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 27(4), pages 696-716, 09.
  4. Rudyk, Ilja, 2013. "Deferred Patent Examination," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 416, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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