Forward Markets to Spur Innovation

Linda Cohen () and Amihai Glazer
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Linda Cohen: Department of Economics, University of California-Irvine

No 131405, Working Papers from University of California-Irvine, Department of Economics

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.

Keywords: Innovation; Public goods; Mechanism design; Patents; Forward contracts (search for similar items in EconPapers)
Pages: 22 pages
Date: 2014-04
New Economics Papers: this item is included in nep-com, nep-cse, nep-gro, nep-ino, nep-ipr and nep-pr~
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Persistent link: https://EconPapers.repec.org/RePEc:irv:wpaper:131405

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