Econ 483_Lecture 12_Optimal IP protection

Intro length the cs with the policy e e t cs p 1 r

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Unformatted text preview: Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Intro Length The CS with the policy e e T CS P + 1 r Breadth Optimal policy ee T , P = (20, 25) is e T CS (0) = 1 (75) 75 + 2 = 81, 250 = 20 Ratio test: λ= 1 0.04 20 1 (100) 100 2 25 75 ,λ=6 (25) 25 1 2 ee ) The policy T , P = (20, 25) is better from consumers’point of view than the policy (T , P ) = (15, 50) since λ is greater. Lecture 12: Optimal design of IP, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Intro Length Breadth Optimal policy Required readings Scotchmer, S., Innovation and Incentives. Chapter 4, pages 97-101, 104-105, 108-110 Lecture 12: Optimal design of IP, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Intro Length Breadth Optimal policy Length & breadth [this slide: optional (not required)] Consumers are better o¤ with the policy e T CS (p ) + e 1 r e T ee T , p if CS ( 0 ) > T CS ( p ) + 1 r CS (0) T e e T CS (p ) T CS (0) > T CS (p ) T CS (0) e e T [CS (0) CS (p )] < T [CS (0) CS (p )] e Note that the loss in CS by setting p > 0 is the pro…t p q & the deadweight loss e ee CS (0) Lecture 12: Optimal design of IP, CS (p ) = p q + DWL (p ) e ee e Econ4...
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