Rewards versus intellectual property rights when commitment is limited
Journal of Economic Behavior & Organization, 2020, vol. 169, issue C, 397-411
This paper compares the performance of a variety of innovation policy instruments when the government cannot commit to transfer cash rewards to an innovator and has the option to divert resources to alternative investments. In a dynamic environment in which government’s investment opportunities evolve stochastically, we provide conditions under which the optimal mechanism is a price regulation system where the inventor owns intellectual property and receives a cash transfer when price equals marginal cost. We illustrate how a dynamic complementarity between cash rewards and intellectual property may arises when the government’s budget is limited and monopoly distortions are not too severe. We discuss how other forms of complementarity between cash transfers and intellectual property may emerge, with patent rights serving as a discipline device that ensures the payment of the reward.
Keywords: Intellectual property; Patents; Prizes; Innovation; R&D (search for similar items in EconPapers)
JEL-codes: O32 O34 K11 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:169:y:2020:i:c:p:397-411
Access Statistics for this article
Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.
More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Haili He ().