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Cumulative Innovation, Sampling and the Hold-Up Problem

Rufus Pollock ()

MPRA Paper from University Library of Munich, Germany

Abstract: With cumulative innovation and imperfect information about the value of innovations, intellectual property rights can result in hold-up and therefore it may be better not to have them. Extending the basic cumulative innovation model to include `sampling' by second-stage firms, we find that the lower the cost of sampling, or the larger the differential between high and low value second-stage innovations, the more likely it is that a regime without intellectual property rights will be preferable. Thus, technological change which reduces the cost of encountering and trialling new `ideas' implies a reduction in the socially optimal level of rights such as patent and copyright.

Keywords: Cumulative Innovation; Hold-Up; Sampling; Intellectual Property (search for similar items in EconPapers)
JEL-codes: K3 L5 O3 (search for similar items in EconPapers)
Date: 2006-01-24, Revised 2007-08-10
New Economics Papers: this item is included in nep-bec, nep-com, nep-ino, nep-ipr, nep-pr~ and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Cumulative Innovation, Sampling and the Hold-Up Problem (2006) Downloads
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