Econ 483_Lecture 12_Optimal IP protection

Intro length breadth optimal policy an idea i is

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Unformatted text preview: ngth Breadth Optimal policy An idea i is described by a pair (vi , ci ), i = 1, 2. vi : the per-period (potential) consumers’surplus with competitive supply lv : the per-period deadweight loss (DWL), l < 1 π v : the monopolist’per-period pro…t at pm π vT : the value of the patent for the inventor (pro…t) over its life T Lecture 12: Optimal design of IP, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Intro Length Breadth Optimal policy A space of "ideas"; an idea (vi , ci ) is represented as a point in the space. ci : the cost of developing the idea into an innovation Lecture 12: Optimal design of IP, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Intro Length Breadth Optimal policy e e Suppose: shorter & longer protection, T & T where T < T The idea (vb , cb ) would be ‘ pro…table’enough for investment with the longer protection but not with the shorter protection: e π vb T < cb < π vb T Lecture 12: Optimal design of IP, Econ483: Econ of Innovation & Technology, Evange...
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