Trade in Ideas: Performance and Behavioural Properties of Markets in Patents with Two-part Tariff

Eskil Ullberg ()
Additional contact information
Eskil Ullberg: The Ratio Institute and George Mason University, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden, http://ratio.se/medarbetare/eskil-ullberg/

No 261, Ratio Working Papers from The Ratio Institute

Abstract: Performance and behavioural properties of markets in patents are studied using a contract with a two-part tariff (fixed fee and royalty) on patented technology with limited validity and random values, in an economic experiment. Performance doubles when demand side bidding is introduced for both tariffs, resulting in gains from trade, compared with supply side take-it-or-leave-it offers. This departs from the hierarchical view of (Arrow, 1962), where the invention and innovation takes place in the same firm, eliminating any gains from trade in the analysis. An informal theory is proposed, based on insurance of market access, and tested. The sustained prices support the hypothesis that fixed fee = blocking value, thus supports rational expectations according to Muth under conditions of demand-side bidding in both tariffs. Understanding nature then drives demand for science (North, 1981). What made productivity grow in Europe may therefore have been the patent system by increasing growth in economically useful technology through a producer market.

Keywords: patent markets; two-part tariff contract; patent licensing; insurance; experimental economics; intellectual property rights assets (search for similar items in EconPapers)
JEL-codes: B00 C92 D47 L10 O00 O30 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2015-12-23
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr and nep-pr~
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://ratio.se/app/uploads/2015/11/eu_trade_ideas_patents_261.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://ratio.se/app/uploads/2015/11/eu_trade_ideas_patents_261.pdf [308 Permanent Redirect]--> https://ratio.se/app/uploads/2015/11/eu_trade_ideas_patents_261.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:ratioi:0261

Access Statistics for this paper

More papers in Ratio Working Papers from The Ratio Institute The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Martin Korpi ().