intellectual property rights and the knowledge spillover theory of entrepreneurship
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Intellectual Property Rights and the Knowledge Spillover Theory of Entrepreneurship. NAKE Day 24 October 2008 Utrecht. Zoltan Acs George Mason University Max Planck Institute of Economics Fairfax (VI) Mark Sanders Utrecht School of Economics Max Planck Institute of Economics - PowerPoint PPT PresentationTRANSCRIPT
Intellectual Property Rights and the Knowledge Spillover Theory of Entrepreneurship
Zoltan AcsGeorge Mason University
Max Planck Institute of EconomicsFairfax (VI)
Mark SandersUtrecht School of Economics
Max Planck Institute of [email protected]
NAKE Day24 October 2008Utrecht
MotivationPatents and the US Patent Reform:
Patents and the Bargain over RentsIncentives for Knowledge CreationIncentives for Knowledge CommercializationOutcomes
Growth and Ideas; the basic model structureConsumersProducers/Intermediates
Invention, Innovation and Growth Schumpeter and Endogenous Growth Theory
Innovation vs. InventionWho gets rents?Opportunities vs. IdeasThe source of vs. the bottleneck in innovation
PatentsHistorical:
Royal Favor and RevenueInventions and InnovationsKnowledge and Ideas Recent US reforms
The Rationale:Knowledge creation is source of growthPatents reward knowledge creationPatent protection stimulates growth
Incentives and Rewards:But what drives knowledge creation?And what drives invention?And what drives innovation?
Growth and IdeasBasic Structure: Consumers
1. Willing to save2. Demand for innovations
Basic Structure: Producers1. Make profit (imperfect competition)
2. Demand production factors
Growth and IdeasBasic Structure: Inventors/Innovators
1. Make zero-profit (free entry)2. Need to demand R&D factors
dttiπeTVTVT
ttrnq ),()()( )(
Auction off ideas at willingness to pay:
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Produce ideas according to:
Growth and IdeasBasic Structure:
1. Growth is positive for positive R&D2. Sub-optimal in case of spillovers
Intra-temporal knowledge spilloversInter-temporal knowledge spilloversPositive steady state growth requires:
latent demand for innovationimperfect competition appropriation of rents by new knowledge creatorsincreasing returns to scale in aggregate production
Optimal growth requires: stimulation of knowledge creationpatents to internalize part of the spillovers
A Model (Acs and Sanders 2008)
Producers of final good C
Consumers of final good C
Producers of n intermediate
goods
Capital Market
Labor Market
A Model (Acs and Sanders 2008)
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A Model (Acs and Sanders 2008)
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A Model (Acs and Sanders 2008)
Final Goods Producers (R&D)
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A Model (Acs and Sanders 2007)
Intermediate Goods Producers
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A Model (Acs and Sanders 2007)
Intermediate Goods Producers (Entry)
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)/1)(1)((~
Entry-Arbitrage:
A Model (Acs and Sanders 2008)
Equilibrium in labor market:
ERS www ~
A Model (Acs and Sanders 2008)
Equilibrium
A/n
1
A/n*
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ww~
A Model (Acs and Sanders 2008)
Equilibrium Steady State:
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A Model (Acs and Sanders 2008)
New Features:Captures spin-out/offCaptures upstream spillovers (specialization)
Captures downstream spillovers (opportunities) Residual rents reward commercializationTransfer of rents from innovators to inventors
Results in line with new growth theory:Growth Sub-OptimalCase for R&D and Entrepreneurs subsidyR&D more than EntrepreneursMore patent protection means more R&D…
Results in contrast to new growth theory:…but also less commercialization.Too much protection leads to lower innovation Distinguishing entrepreneurs makes a difference
A Model (Acs and Sanders 2008)
In the tradition of Schumpeter we:…separate commercialization and invention,…allocate the residual rents to the entrepreneur,…assume opportunity to be a spillover.
In the tradition of Romer we:…see patents as (imperfect) claims to rents,…that incentivize knowledge creation.
But we show that:…patents are not needed to incentivize R&D and……patent protection may overshoot the target,…as Jaffe and Lerner (2004) argue it has in the US.