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Coordination of Inventions and Innovations through patent markets with prices

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Abstract

This article examines coordination between inventors and innovators through prices in a market for contracts on patented technology, in a controlled laboratory experiment. Typically, a hierarchical approach is used to analyze such coordination, new technology being exogenous, and risk managed in separate markets. Price signals and search patterns are compared for three institutional mechanisms and two levels of patent validity in a 3 x 2 experimental design. “Willingness to search” in a technology map of 9 “technology areas”, each with private and uncertain values for agents, are used to characterize and differentiate institutional behavior with respect to investment decisions in new technology. The results indicate that coordination and that the willingness to search out the most valuable technology differs sharply between the mechanisms; low patent validity also results in poor coordination. Policy implications suggest facilitating a market in tradable contracts on patents is needed. This may entail lowering risk in using patent “assets” (access to quality patents and enforcements for SMEs) and new forms of legal associations for IP intensive firms.

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  • Ullberg, Eskil, 2015. "Coordination of Inventions and Innovations through patent markets with prices," Ratio Working Papers 260, The Ratio Institute.
    • Handle: RePEc:hhs:ratioi:0260
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    References listed on IDEAS

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    1. Eskil Ullberg, 2010. "From Personal to Impersonal Exchange in Ideas: An Experimental Study of Patent Markets with Transparent Prices," Working Papers 1017, George Mason University, Interdisciplinary Center for Economic Science.
    2. Smith, Vernon L, 1982. "Microeconomic Systems as an Experimental Science," American Economic Review, American Economic Association, vol. 72(5), pages 923-955, December.
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    6. Ullberg, Eskil, 2010. "THE PROBLEM OF TRADING PATENTS IN ORGANIZED MARKETS: A dynamic experimental microeconomic system model and informal price theory," Working Paper Series in Economics and Institutions of Innovation 229, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
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    More about this item

    Keywords

    patent markets; coordination; invention; innovation; patent licensing; experimental economics; intellectual property rights assets;
    All these keywords.

    JEL classification:

    • B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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