Collective Rights Organizations and Investment in Upstream R&D
AbstractWe examine third-party collective rights organisations (CROs) such as clearinghouses that license innovations on behalf of inventors when downstream uses require licenses to multiple complementary innovations. We consider two simple royalty redistribution schemes, two different innovation environments and two different antitrust rules. We show that in most cases CROs increase incentives to invest in R&D as they increase profits from licensing. However, incentives to invest of inventors who have the unique ability to develop a crucial component may be weakened. We also show that CROs may increase or decrease expected welfare, and are more likely to be beneficial when R&D costs are relatively high, and/or the probability of success for inventors is relatively low.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd08-045.
Date of creation: Mar 2009
Date of revision:
Intellectual property; licensing; collective rights organizations; anticommons;
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 Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-18 (All new papers)
- NEP-COM-2009-04-18 (Industrial Competition)
- NEP-INO-2009-04-18 (Innovation)
- NEP-IPR-2009-04-18 (Intellectual Property Rights)
- NEP-MIC-2009-04-18 (Microeconomics)
- NEP-TID-2009-04-18 (Technology & Industrial Dynamics)
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