Scarcity of Ideas and Options to Invest in R&D
AbstractWe consider a model of the innovative environment where there is a distinction between ideas for R&D investments and the investments themselves. We investigate the optimal reward policy and how it depends on whether ideas are scarce or obvious. By foregoing investment in a current idea, society as a whole preserves an option to invest in a better idea for the same market niche, but with delay. Because successive ideas may occur to different people, there is a conflict between private and social optimality. We argue that private incentives to create socially valuable options can be achieved by giving higher rewards where "ideas are scarce." We then explore how rewards should be structured when the value of an innovation comes from its applications, and ideas for the innovation may be more or less scarce than ideas for the applications.
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Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 1035.
Length: 40 pages
Date of creation: 2008
Date of revision:
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More information through EDIRC
Ideas; patents; intellectual property; innovation; options; nonobviousness;
Other versions of this item:
- Erkal, Nisvan & Scotchmer, Suzanne, 2007. "Scarcity of Ideas and Options to Invest in R&D," Department of Economics, Working Paper Series qt2hq9s5kg, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Erkal, Nisvan & Scotchmer, Suzanne, 2007. "Scarcity of Ideas and Options to Invest in R&D," Competition Policy Center, Working Paper Series qt4s01d7md, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property Rights
- K00 - Law and Economics - - General - - - General (including Data Sources and Description)
- L00 - Industrial Organization - - General - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-25 (All new papers)
- NEP-INO-2008-11-25 (Innovation)
- NEP-IPR-2008-11-25 (Intellectual Property Rights)
- NEP-LAW-2008-11-25 (Law & Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Scotchmer, Suzanne & Erkal, Nisvan, 2009.
"Scarcity of Ideas and R&D Options: Use it, Lose it or Bank it,"
Department of Economics, Working Paper Series
qt1295k6gg, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Erkal, Nisvan & Scotchmer, Suzanne, 2009. "Scarcity of Ideas and R&D Options: Use it, Lose it, or Bank it," Berkeley Olin Program in Law & Economics, Working Paper Series qt74c709qr, Berkeley Olin Program in Law & Economics.
- Nisvan Erkal & Suzanne Scotchmer, 2009. "Scarcity of Ideas and R&D Options: Use it, Lose it or Bank it," NBER Working Papers 14940, National Bureau of Economic Research, Inc.
- Scotchmer, Suzanne, 2009. "Scarcity of Ideas and R&D Options: Use it, Lose it, or Bank it," Competition Policy Center, Working Paper Series qt2p5543p0, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
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