Collective Rights Organizations and Upstream R&D Investment
AbstractWe examine the effect of collective rights organizations (CROs) on upstream innovation. CROs are established to facilitate downstream use, such as production and downstream innovation, of upstream intellectual property. We compare CROs with two alternative royalty redistribution rules, two different upstream innovation environments and two different anti-trust rules. Most CROs increase upstream R&D incentives by increasing licensing profit but this may lead to over-investment. We observe that when the market is ex-ante asymmetric (only one firm has ability to develop one of the technologies), unequal royalty distribution in favor of the one firm may be ex-post efficient but may result in under investment in the complementary technology. Thus in addition to balancing the trade-off between ex-ante (dynamic) efficiency and ex-post (static) efficiency as in the case of a single intellectual property, CROs must achieve the balance among members.
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Bibliographic InfoPaper provided by Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University in its series PIE/CIS Discussion Paper with number 457.
Length: 33 p.
Date of creation: Oct 2009
Date of revision:
Note: 8 January 2009
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Intellectual property; patent licensing; collective rights organizations; anticommons; anti-trust; royalty;
Find related papers by JEL classification:
- L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-21 (All new papers)
- NEP-INO-2009-11-21 (Innovation)
- NEP-IPR-2009-11-21 (Intellectual Property Rights)
- NEP-TID-2009-11-21 (Technology & Industrial Dynamics)
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