Monday, June 6, 2011
Posted by D. Daniel Sokol
Vincenzo Denicolò, University of Bologna - Department of Economics and Luigi Alberto Franzoni, University of Bologna - Faculty of Economics explore Rewarding Innovation Efficiently: Research Spill-Overs and Exclusive IP Rights.
ABSTRACT: We investigate the conditions for the desirability of exclusive intellectual property rights for innovators, as opposed to weak rights allowing for some degree of imitation and ex-post competition. The comparison between the two alternatives reduces to a specific "ratio test," which suggests that strong, exclusive IP rights are preferable when competition from potential imitators is weak, the innovation attracts large R&D investments, and research spill-overs are small.