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Forward Markets to Spur Innovation

Author

Listed:
  • Linda Cohen

    (Department of Economics, University of California-Irvine)

  • Amihai Glazer

    (Department of Economics, University of California-Irvine)

Abstract

This paper presents a mechanism inducing costly research and innovation in the absence of intellectual property rights. The mechanism relies on forward contracting between the provider of the innovation and firms or individuals that benefit from the pecuniary effects of the innovation, rather than from its direct use. Applied to innovation as a non-discrete public good, the mechanism resolves time consistency, agency, and free-riding problems, and provides an incentive for ex post efficient pricing.

Suggested Citation

  • Linda Cohen & Amihai Glazer, 2014. "Forward Markets to Spur Innovation," Working Papers 131405, University of California-Irvine, Department of Economics.
    • Handle: RePEc:irv:wpaper:131405
    as

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    File URL: https://www.economics.uci.edu/files/docs/workingpapers/2013-14/13-14-05.pdf
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    References listed on IDEAS

    as
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    Keywords

    Innovation; Public goods; Mechanism design; Patents; Forward contracts;
    All these keywords.

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