Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, June 1, 2011

Selection Biases in Complementary R&D Projects

Posted by D. Daniel Sokol

Jay Pil Choi, Michigan State University - Department of Economics and Heiko A. Gerlach, University of Queensland - School of Economics explain Selection Biases in Complementary R&D Projects.

ABSTRACT: This paper analyzes selection biases in the project choice of complementary technologies that are used in combination to produce a final product. In the presence of complementary technologies, patents allow innovating firms to hold up rivals who succeed in developing other system components. This hold-up potential induces firms to preemptively claim stakes on component property rights and excessively cluster their R&D efforts on a relatively easier technology. This selection bias is persistent and robust to several model extensions. Implications for the optimal design of intellectual property rights are discussed. We also analyze selection biases that arise when firms differ in research capabilities.

| Permalink

TrackBack URL for this entry:

Listed below are links to weblogs that reference Selection Biases in Complementary R&D Projects:


Post a comment