Shared Rights and Technological Progress

Matthew Mitchell and Yuzhe Zhang ()

MPRA Paper from University Library of Munich, Germany

Abstract: We study how best to reward innovators whose work builds on earlier innovations. Incentives to innovate are obtained by offering innovators the opportunity to profit from their innovations. Since innovations compete, awarding rights to one innovator reduces the value of the rights to prior innovators. We show that the optimal allocation involves shared rights, where more than one innovator is promised a share of profits from a given innovation. We interpret such allocations in three ways: as patents that infringe on prior art, as licensing through an optimally designed ever-growing patent pool, and as randomization through litigation. We contrast the rate of technological progress under the optimal allocation with the outcome if sharing is prohibitively costly, and therefore must be avoided. Avoiding sharing initially slows progress, and leads to a more variable rate of technological progress.

Keywords: Cumulative Innovation; Patent; Licensing; Patent Pool; Litigation (search for similar items in EconPapers)
JEL-codes: D43 D82 L53 O31 O34 (search for similar items in EconPapers)
Date: 2012-01
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-pr~ and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Shared Rights and Technological Progress (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:36537

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