The Effect of Litigation on Intellectual Property and Welfare
AbstractThis paper shows that “wasteful” litigation about intellectual property may be welfare enhancing. The aim of an intellectual property protection system is to solve the trade-off between exante innovation incentive and ex-post monopoly welfare loss. The litigation about intellectual property in court decreases the expected rent from intellectual property, therefore reducing the incentive to innovate in the first place leading to a negative effect on social welfare. Yet the legal contest may have the positive welfare effect of breaking the monopoly and allowing an entrant into the market, thus lowering prices and reducing the welfare loss of monopoly. If the welfare effect of increasing competition outweighs the first effect of reduced research, a litigation contest is welfare increasing.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0511.
Date of creation: Dec 2005
Date of revision:
Contact details of provider:
Web page: http://www.univie.ac.at/vwl
Find related papers by JEL classification:
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
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.:
- Scherer, F. M. & Harhoff, Dietmar, 2000. "Technology policy for a world of skew-distributed outcomes," Research Policy, Elsevier, vol. 29(4-5), pages 559-566, April.
- Denicolo, Vincenzo, 1996. "Patent Races and Optimal Patent Breadth and Length," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 249-65, September.
- Michael R. Baye & Dan Kovenock & Casper G. de Vries, 2000.
"Comparative Analysis of Litigation Systems: An Auction-Theoretic Approach,"
CIG Working Papers
FS IV 00-13, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Michael R. Baye & Dan Kovenock & Casper G. Vries, 2005. "Comparative Analysis of Litigation Systems: An Auction-Theoretic Approach," Economic Journal, Royal Economic Society, vol. 115(505), pages 583-601, 07.
- Michael R. Baye & Dan Kovenock & Casper G. de Vries, 2000. "Comparative Analysis of Litigation Systems: An Auction-Theoretic Approach," Tinbergen Institute Discussion Papers 00-103/2, Tinbergen Institute.
- Michael R. Baye & Dan Kovenock & Casper De Vries, 2000. "Comparative Analysis of Litigation Systems: An Auction-Theoretic Approach," CESifo Working Paper Series 373, CESifo Group Munich.
- Michael R. Baye & Dan Kovenock & Casper G. de Vries, 2004. "Comparative Analysis of Litigation Systems: An Auction-Theoretic Approach," Working Papers 2004-24, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
- Baye, M.R. & Kovenock D. & De Vries, C.G., 2000. "Comparative Analysis of Litigation Systems: an Auction-Theoretic Approach," Purdue University Economics Working Papers 1137, Purdue University, Department of Economics.
- Waterson, Michael, 1990. "The Economics of Product Patents," American Economic Review, American Economic Association, vol. 80(4), pages 860-69, September.
- Farmer, Amy & Pecorino, Paul, 1999. " Legal Expenditure as a Rent-Seeking Game," Public Choice, Springer, vol. 100(3-4), pages 271-88, September.
- Arye L. Hillman & John G. Riley, 1989.
"Politically Contestable Rents And Transfers,"
Economics and Politics,
Wiley Blackwell, vol. 1(1), pages 17-39, 03.
- Gilbert, Richard J & Newberry, David M G, 1984. "Uncertain Innovation and the Persistence of Monopoly: Comment," American Economic Review, American Economic Association, vol. 74(1), pages 238-42, March.
- Paul Klemperer, 1990.
"How Broad Should the Scope of Patent Protection Be?,"
RAND Journal of Economics,
The RAND Corporation, vol. 21(1), pages 113-130, Spring.
- Klemperer, Paul, 1990. "How Broad Should the Scope of Patent Protection Be?," CEPR Discussion Papers 392, C.E.P.R. Discussion Papers.
- Lanjouw, Jean O & Schankerman, Mark, 2001. "Characteristics of Patent Litigation: A Window on Competition," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 129-51, Spring.
- Steven Shavell & Tanguy van Ypersele, 1999.
"Rewards versus Intellectual Property Rights,"
NBER Working Papers
6956, National Bureau of Economic Research, Inc.
- SHAVELL, Steven & VAN YPERSELE, Tanguy, . "Rewards versus intellectual property rights," CORE Discussion Papers RP -1597, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Ypersele, T.P.M.C. van & Shavell, S., 1999. "Rewards versus Intellectual Property Rights," Discussion Paper 1999-26, Tilburg University, Center for Economic Research.
- Glenn C. Loury, 1976.
"Market Structure and Innovation,"
256, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Stephen M. Maurer & Suzanne Scotchmer, 2003. "Procuring Knowledge," NBER Working Papers 9903, National Bureau of Economic Research, Inc.
- Cooter, Robert D & Rubinfeld, Daniel L, 1989. "Economic Analysis of Legal Disputes and Their Resolution," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1067-97, September.
- Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
- Nordhaus, William D, 1972. "The Optimum Life on a Patent: Reply," American Economic Review, American Economic Association, vol. 62(3), pages 428-31, June.
- Martin Kolmar & firstname.lastname@example.org & Andreas Wagener, 2012. "Contests and the Private Production of Public Goods," Southern Economic Journal, Southern Economic Association, vol. 79(1), pages 161-179, July.
- Lee, Tom & Wilde, Louis L, 1980. "Market Structure and Innovation: A Reformulation," The Quarterly Journal of Economics, MIT Press, vol. 94(2), pages 429-36, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paper Administrator).
If references are entirely missing, you can add them using this form.