IDEAS home Printed from https://ideas.repec.org/p/mpg/wpaper/2007_4.html
   My bibliography  Save this paper

Intellectual Property as a Carrot for Innovators Using Game Theory to Show the Limits of the Argument

Author

Listed:
  • Christoph Engel

    () (Max Planck Institute for Research on Collective Goods, Bonn)

Abstract

Policymakers all over the world claim: no innovation without protection. For more than a century, critics have objected that the case for intellectual property is far from clear. This paper uses a game theoretic model to organise the debate. It is possible to model innovation as a prisoner's dilemma between potential innovators, and to interpret intellectual property as a tool for making cooperation the equilibrium. However, this model rests on assumptions about cost and benefit that are unlikely to hold, or have even been shown to be wrong, in many empirically relevant situations. Moreover, even if the problem is indeed a prisoner's dilemma, in many situations intellectual property is an inappropriate cure. It sets incentives to race to be the first, or the last, to innovate, as the case may be. In equilibrium, the firms would have to randomise between investment and non-investment, which is unlikely to work out in practice. Frequently, firms would have to invent cooperatively, which proves difficult in larger industries.

Suggested Citation

  • Christoph Engel, 2007. "Intellectual Property as a Carrot for Innovators Using Game Theory to Show the Limits of the Argument," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2007_4, Max Planck Institute for Research on Collective Goods.
  • Handle: RePEc:mpg:wpaper:2007_4
    as

    Download full text from publisher

    File URL: http://www.coll.mpg.de/pdf_dat/2007_04online.pdf
    Download Restriction: no

    More about this item

    Keywords

    intellectual property; game theory;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mpg:wpaper:2007_4. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marc Martin) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/mppggde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.