Lecture 12 - EEP 143 Lecture 12 Cumulative Innovation Outline Beyond"stand-alone inventions Three types of Cumulativeness of Innovation 1 Basic

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EEP 143 Lecture 12 Cumulative Innovation Outline: Beyond “stand-alone” inventions Three types of Cumulativeness of Innovation: 1) Basic Research Into Application Example (Extensive Game) 2) Research Tools into Applications Example (Simultaneous Game) 3) Quality Ladders Example
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Beyond “stand-alone” inventions Innovations are not generally isolated incidents Innovators build on other innovators’ work or insights “Standing on the shoulders of giants” Who was first to say that?
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The Fundamental Problem: So first innovator adds value to second innovation by making it possible So second innovator adds (social) value to first by making it better/implemented/have a new use/ …. How can society encourage first and later innovators efficiently? Can IPRs do the job?
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The Fundamental Problem: How can society encourage first and later innovators efficiently? Can government contracts do the job? Can prizes do the job? Can IPRs do the job? Copyright? PVPC? Plant patent? Patent?
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The Fundamental Problem: Examples: transgenic plants, laser, tires, light bulbs Three useful categories are: 1. Basic and Applied Research 2. Research Tools and the inventions they enable Embodied disembodied 3. Quality Ladders
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Introduction Innovations are not isolated incidents Innovators build on other innovators’ works (previous knowledge) Example: Einstein’s 1916 paper scientific theory on electromagnetic waves and the development of radar motivated Townes in R&D which eventually led to the invention of the laser First invention was the maser which used microwaves instead of light (Townes of what U?) 1954 patent assigned to the Research Corporation. Laser patent Townes and Schawlaw 1960 assigned to Bell Labs, Research Corp sued, (uses medical surgery, CDs, barcode readers, printers etc.)
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Introduction However the innovation of laser had a lot of battles: Gould (Townes’ student) filed for another patent claiming his laser was superior The litigation lasted for 20 years Gould ended up on the winning side earning a lot of money from licenses ($17M) However, without Townes’ contribution that superior laser would not have been developed (Townes got $1M, plus Nobel Prize) Also Einstein never got money for his contribution!! So the key question that arises is: How do we distribute the profits among the sequential innovators? Did it matter for the development history of the laser?
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Types of cumulativeness of Innovation There are three types of cumulativeness of innovation: 1) Where a basic research innovation leads to many innovations/applications Laser led to medical surgery applications, cd-drives etc. 2) Where an application needs many basic scientific
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This note was uploaded on 08/01/2008 for the course ECON 143 taught by Professor Wright during the Fall '07 term at University of California, Berkeley.

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Lecture 12 - EEP 143 Lecture 12 Cumulative Innovation Outline Beyond"stand-alone inventions Three types of Cumulativeness of Innovation 1 Basic

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