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Intellectual property rights hinder sequential innovation. Experimental evidence

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  • Brüggemann, Julia
  • Crosetto, Paolo
  • Meub, Lukas
  • Bizer, Kilian

Abstract

In this paper we contribute to the discussion on whether intellectual property rights foster or hinder innovation by means of a laboratory experiment. We introduce a novel Scrabble-like word-creation task that captures most essentialities of a sequential innovation process. We use this task to investigate the effects of intellectual property allowing subjects to impose license fees on their innovations. We find intellectual property to have an adverse effect on welfare as innovations become less frequent and less sophisticated. Introducing communication among innovators does not reduce this detrimental effect. Introducing intellectual property results in more basic innovations, with subjects failing to exploit the most valuable sequential innovation paths. Subjects act more self-reliant and non-optimally in order to avoid paying license fees. Our results suggest that granting intellectual property rights hinders innovation, especially for sectors characterized by a strong sequentiality in innovation processes.

Suggested Citation

  • Brüggemann, Julia & Crosetto, Paolo & Meub, Lukas & Bizer, Kilian, 2016. "Intellectual property rights hinder sequential innovation. Experimental evidence," Research Policy, Elsevier, vol. 45(10), pages 2054-2068.
  • Handle: RePEc:eee:respol:v:45:y:2016:i:10:p:2054-2068
    DOI: 10.1016/j.respol.2016.07.008
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    Cited by:

    1. Brüggemann, Julia & Proeger, Till, 2017. "The effectiveness of public subsidies for private innovations: An experimental approach," Center for European, Governance and Economic Development Research Discussion Papers 266, University of Goettingen, Department of Economics.
    2. Brueggemann, Julia & Meub, Lukas, 2015. "Experimental evidence on the effects of innovation contests," Center for European, Governance and Economic Development Research Discussion Papers 251, University of Goettingen, Department of Economics.
    3. repec:eee:iepoli:v:39:y:2017:i:c:p:72-83 is not listed on IDEAS

    More about this item

    Keywords

    Innovation; Intellectual property; Laboratory experiment; Real effort task; Creativity;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
    • P14 - Economic Systems - - Capitalist Systems - - - Property Rights

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