Cumulative Innovation, Sampling and the Hold-Up Problem
AbstractWith cumulative innovation and imperfect information about the value of innovations, intellectual property rights can result in hold-up and therefore it may be better not to have them. Extending the basic cumulative innovation model to include `sampling' by second-stage firms, we find that the lower the cost of sampling, or the larger the differential between high and low value second-stage innovations, the more likely it is that a regime without intellectual property rights will be preferable. Thus, technological change which reduces the cost of encountering and trialling new `ideas' implies a reduction in the socially optimal level of rights such as patent and copyright.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5022.
Date of creation: 24 Jan 2006
Date of revision: 10 Aug 2007
Cumulative Innovation; Hold-Up; Sampling; Intellectual Property;
Other versions of this item:
- Rufus Pollock, 2006. "Cumulative Innovation, Sampling and the Hold-Up Problem," DRUID Working Papers 06-29, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
- L5 - Industrial Organization - - Regulation and Industrial Policy
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
- K3 - Law and Economics - - Other Substantive Areas of Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-09-30 (All new papers)
- NEP-BEC-2007-09-30 (Business Economics)
- NEP-COM-2007-09-30 (Industrial Competition)
- NEP-INO-2007-09-30 (Innovation)
- NEP-IPR-2007-09-30 (Intellectual Property Rights)
- NEP-LAW-2007-09-30 (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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- Pollock, Rufus, 2006. "Innovation and Imitation with and without Intellectual Property Rights," MPRA Paper 5025, University Library of Munich, Germany, revised 17 Jul 2007.
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