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Rewarding innovation efficiently: Research spill-overs and exclusive IP rights

Author

Listed:
  • Vincenzo Denicol

    (Indira Gandhi Institute of Development Research)

  • Luigi A. Franzoni

    (Indira Gandhi Institute of Development ResearchInstitute of Economic Growth)

Abstract

We investigate the conditions for the desirability of exclusive intellectual property rights for innovators as opposed to weak rights allowing for some degree of imitation and ex-post competition. The comparison between the two alternatives reduces to a specific "ratio test," which suggests that strong exclusive IP rights are preferable when competition from potential imitators is weak, the innovation attracts large R&D investments, and research spill-overs are small.

Suggested Citation

  • Vincenzo Denicol & Luigi A. Franzoni, 2011. "Rewarding innovation efficiently: Research spill-overs and exclusive IP rights," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2011-002, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2011-002
    as

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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2011-002.pdf
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    References listed on IDEAS

    as
    1. La Manna, Manfredi & Macleod, Ross & de Meza, David, 1989. "The case for permissive patents," European Economic Review, Elsevier, vol. 33(7), pages 1427-1443, September.
    2. Vincenzo Denicolò & Luigi Alberto Franzoni, 2004. "Patents, Secrets, and the First‐Inventor Defense," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(3), pages 517-538, September.
    3. Denicolo, Vincenzo & Franzoni, Luigi Alberto, 2003. "The contract theory of patents," International Review of Law and Economics, Elsevier, vol. 23(4), pages 365-380, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Kaplow test; research spill-overs; patents and trade secrets; independent invention defense; mandatory licensing;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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