Who is Afraid of Pirates? An Experiment on the Deterrence of Innovation by Imitation

Christoph Engel and Marco Kleine ()
Additional contact information
Marco Kleine: Max Planck Institute for Research on Collective Goods, Bonn

No 2013_07, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: In the policy debate, intellectual property is often justified by what seems to be a straightforward argument: if innovators are not protected against others appropriating their ideas, incentives for innovation are suboptimally low. Now in most industries for most potential users, appropriating a foreign innovation is itself an investment decision fraught with cost and risk. Nonetheless standard theory predicts too little innovation. Arguably the problem is exacerbated by innovators’ risk aversion as well as their aversion against others benefitting from their efforts without contributing to the cost, and without bearing innovation risk. We model the situation as a game and test it in the lab. We find even more appropriation than predicted by standard theory. But the risk and the experience of appropriation does not deter innovation. We find even more innovation than predicted by theory, and actually more than would be efficient. In the lab, the prospect of givingimitators a free lunch does not have a chilling effect on innovation.

Keywords: Innovation; imitation; appropriation; patent; fairness of desert (search for similar items in EconPapers)
JEL-codes: C91 D22 D62 D63 H23 H41 K11 L17 O31 (search for similar items in EconPapers)
Date: 2013-05, Revised 2013-11
New Economics Papers: this item is included in nep-exp, nep-ino, nep-ipr, nep-pr~ and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.coll.mpg.de/pdf_dat/2013_07online.pdf (application/pdf)

Related works:
Journal Article: Who is afraid of pirates? An experiment on the deterrence of innovation by imitation (2015)
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:mpg:wpaper:2013_07

Access Statistics for this paper

More papers in Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods Contact information at EDIRC.
Bibliographic data for series maintained by Marc Martin ().