Forward Markets to Spur Innovation
AbstractThis paper presents a mechanism inducing costly research and innovation in the absence of intellectual property rights. The mechanism relies on forward contracting between the provider of the innovation and firms or individuals that benefit from the pecuniary effects of the innovation, rather than from its direct use. Applied to innovation as a non-discrete public good, the mechanism resolves time consistency, agency, and free-riding problems, and provides an incentive for ex post efficient pricing.
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Bibliographic InfoPaper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 131405.
Length: 22 pages
Date of creation: Apr 2014
Date of revision:
Innovation; Public goods; Mechanism design; Patents; Forward contracts;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-05-17 (All new papers)
- NEP-COM-2014-05-17 (Industrial Competition)
- NEP-CSE-2014-05-17 (Economics of Strategic Management)
- NEP-GRO-2014-05-17 (Economic Growth)
- NEP-INO-2014-05-17 (Innovation)
- NEP-IPR-2014-05-17 (Intellectual Property Rights)
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