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on Intellectual Property Rights |
| By: | Ashish Arora; Andrea Fosfuri; Thomas Roende |
| Abstract: | Over the last decade, companies have paid greater attention to the management of their intellectual assets. We build a model that helps understand how licensing activity should be organized within large corporations. More specifically, we compare decentralization—where the business unit using the technology makes licensing decisions—to centralized licensing. The business unit has superior information about licensing opportunities but may not have the appropriate incentives because its rewards depend upon product market performance. If licensing is decentralized, the business unit forgoes valuable licensing opportunities since the rewards for licensing are (optimally) weaker than those for product market profits. This distortion is stronger when production-based incentives are more powerful, making centralization more attractive. Growth of technology markets favors centralization and drives higher licensing rates. Our model conforms to the existing evidence that reports heterogeneity across firms in both licensing propensity and organization of licensing. |
| JEL: | L2 L24 O32 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18203&r=ipr |
| By: | Di Gaetano, Luigi |
| Abstract: | In recent years there has been an increasing diffusion of open source projects, as well as an increasing interest among scholars on the topic. Open source software (OSS) is developed by communities of programmers and users, usually sponsored by private firms; OSS is available in the public domain and redistributed for free. In this paper a model of open and closed source software (CSS) competition will be presented. Hardware and software are complement goods and OSS is financed by hardware firms. There is a differentiated oligopoly of hardware–software bundles, in which firms compete in prices. Results are several; positive (hardware firm) contributions are possible, although, they are not socially optimal. OSS availability has a positive impact on social welfare, and on hardware firms’ profits and prices. CSS firm’s price and profits decrease when OSS is available. The effect on the price of the hardware–CSS bundle depends on demand own–price elasticity. The model can explain the increasing participation in open source projects of embedded device producers. Hardware firms’ incentives to contribute to OSS development process are greater when there is a relatively intensive competition among producers. Hardware firms use OSS to decrease the software monopolist’s market power. |
| Keywords: | Open source; software markets; differentiated oligopoly; complement goods |
| JEL: | D21 L11 L17 D43 |
| Date: | 2012–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:39849&r=ipr |
| By: | Luiz Flavio Andrade (Gate-Groupe d'analyse théorique et économique) |
| Abstract: | Pharmaceutical firms have been criticized for concentrating their efforts of R&D on the so called “me-too” or “follow-on” drugs. There have been many comments against and favourable to the dissemination of these incremental innovations but few papers have broached the subject from an empirical point of view, possibly because identification of “me-too” is not so obvious. This paper focuses on the impact of entry order on “follow-on” drugs competition in the French market between years 2001 and 2007. More precisely, this study examines the effects on market share of first entrants in the follow-on drug market and how this possible competitive advantage changes over time. Our results are coherent with theoretical microeconomic issues concerning the importance of being first. We find evidence that first movers in the follow on drug market have the ability to capture and maintain greater market share for a long period of time. The hierarchical market position of follow on drugs does not seem to be affected by generic drugs emergence. From a dynamic perspective, our analysis shows that market share is positively correlated with the ability of follow on drugs to set prices higher than the average follow-on drug price in a specific therapeutic class (ATC) which means that market power remains considerably important for first movers. Finally we found that the optimum level of innovation to maximize market share is the highest one. |
| Keywords: | Incremental innovation; Follow-on drugs; Entry timing; Market share. |
| JEL: | I18 I12 L65 L51 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:irh:wpaper:dt49&r=ipr |
| By: | Jochen Fahrenberg |
| JEL: | R10 I31 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:rsw:rswwps:rswwps200&r=ipr |