Rewarding Sequential Innovators: Prizes, Patents and Buyouts
Gerard Llobet,
Hugo Hopenhayn and
Matthew Mitchell
Working Papers from CEMFI
Abstract:
This paper presents a model of cumulative innovation where firms are heterogeneous in their research ability. We study the optimal reward policy when the quality of the ideas and their subsequent development effort are private information. The optimal assignment of property rights must counterbalance the incentives of current and future innovators. The resulting mechanism resembles a menu of patents that have infinite duration and fixed scope, where the latter increases in the value of the idea. Finally, we provide a way to implement this patent menu by using a simple buyout scheme: The innovator commits at the outset to a price ceiling at which he will sell his rights to a future inventor. By paying a larger fee initially, a higher price ceiling is obtained. Any subsequent innovator must pay this price and purchase its own buyout fee contract.
Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (10)
Downloads: (external link)
https://www.cemfi.es/ftp/wp/0012.pdf (application/pdf)
Related works:
Journal Article: Rewarding Sequential Innovators: Prizes, Patents, and Buyouts (2006) 
Working Paper: Rewarding Sequential Innovators: Prizes, Patents and Buyouts (2003) 
Working Paper: Rewarding sequential innovators: prizes, patents and buyouts (2000) 
Working Paper: Rewarding Sequential Innovators: Prizes, Patents and Buyouts (2000)
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:cmf:wpaper:wp2000_0012
Access Statistics for this paper
More papers in Working Papers from CEMFI Contact information at EDIRC.
Bibliographic data for series maintained by Araceli Requerey ().