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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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Paper provided by HAL in its series Working Papers with number hal-00419330_v1.

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Date of creation: 23 Sep 2009
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  1. Giuseppe Moscarini & Lones Smith, 2001. "The Optimal Level of Experimentation," Econometrica, Econometric Society, vol. 69(6), pages 1629-1644, November. [Downloadable!] (restricted)
  2. Patrick Bolton & Christopher Harris, 1999. "Strategic Experimentation," Econometrica, Econometric Society, vol. 67(2), pages 349-374, March.
  3. Cox, John C. & Ross, Stephen A. & Rubinstein, Mark, 1979. "Option pricing: A simplified approach," Journal of Financial Economics, Elsevier, vol. 7(3), pages 229-263, September. [Downloadable!] (restricted)
  4. Marc Baudry & Béatrice Dumont, 2006. "Patent Renewals as Options: Improving the Mechanism for Weeding Out Lousy Patents," Review of Industrial Organization, Springer, vol. 28(1), pages 41-62, 02. [Downloadable!] (restricted)
  5. Claude Crampes & Corinne Langinier, 1998. "Information Disclosure in the REnewal of Patent," Annales d'Economie et de Statistique, ADRES, issue 49-50, pages 11, Janvier-J. [Downloadable!]
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  6. Joshua S. Gans & Stephen P. King & Ryan Lampe, 2004. "Patent Renewal Fees and Self-Funding Patent Offices," The B.E. Journal of Theoretical Economics, Berkeley Electronic Press, vol. 0(1). [Downloadable!]
  7. Bosworth, D L, 1978. "The Rate of Obsolescence of Technical Knowledge-A Note," Journal of Industrial Economics, Blackwell Publishing, vol. 26(3), pages 273-79, March. [Downloadable!] (restricted)
  8. de Rassenfosse, Gaétan & van Pottelsberghe, Bruno, 2008. "On the price elasticity of demand for patents," CEPR Discussion Papers 7029, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Kelly, David L. & Kolstad, Charles D., 1999. "Bayesian learning, growth, and pollution," Journal of Economic Dynamics and Control, Elsevier, vol. 23(4), pages 491-518, February. [Downloadable!] (restricted)
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