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Collective Rights Organizations and Upstream R&D Investment

Author

Listed:
  • Aoki, Reiko
  • 青木, 玲子
  • アオキ, レイコ
  • Schiff, Aaron

Abstract

We examine the effect of collective rights organizations (CROs) on upstream innovation. CROs are established to facilitate downstream use, such as production and downstream innovation, of upstream intellectual property. We compare CROs with two alternative royalty redistribution rules, two different upstream innovation environments and two different anti-trust rules. Most CROs increase upstream R&D incentives by increasing licensing profit but this may lead to over-investment. We observe that when the market is ex-ante asymmetric (only one firm has ability to develop one of the technologies), unequal royalty distribution in favor of the one firm may be ex-post efficient but may result in under investment in the complementary technology. Thus in addition to balancing the trade-off between ex-ante (dynamic) efficiency and ex-post (static) efficiency as in the case of a single intellectual property, CROs must achieve the balance among members.

Suggested Citation

  • Aoki, Reiko & 青木, 玲子 & アオキ, レイコ & Schiff, Aaron, 2009. "Collective Rights Organizations and Upstream R&D Investment," PIE/CIS Discussion Paper 457, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:piecis:457
    Note: 8 January 2009
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/17691/pie_dp457.pdf
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    More about this item

    Keywords

    Intellectual property; patent licensing; collective rights organizations; anticommons; anti-trust; royalty;
    All these keywords.

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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