Econ 483_Lecture 16_Cumulative innovation

C umulative innovation licensing shifting dominance

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Unformatted text preview: reserved. C umulative innovation Licensing Shifting dominance ) "leapfrogging" In the market for desktop operating systems, the market dominance moved from CP/M to MS-/PC-DOS, & then to Windows. Microsoft was a latter comer. Microsoft has been its own successor by introducing compatible updates. Lecture 16: Cumulative innovation Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Licensing Ideas are scarce. Successive innovations will (usually) be made by di¤erent innovators. When an investment is made, ideas for future progress are unknown. The inventor must have a subjective notion of their prospective worth. Lecture 16: Cumulative innovation Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Licensing - How does IP organize the division of pro…t among sequential innovators? - Will the …rst innovator be compensated for the foundation laid for later innovators? ) IP rights must create the right incentives at each stage of innovation. i.e. the cost of innovation must be covered by pro…ts at each stage Lecture 16: Cumulative innovation Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Licensing Types of cumulativeness Lecture 16: Cumulative innovation Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Licensing A single innovation leads to many 2nd-generation innovations. e.g. the laser leads in surgical application etc - Can the …rst innovator collect some pro…ts from the later innovations? Lecture 16: Cumulative innovation Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. C umulative innovation Licensing A 2nd-generation product requires the input of many di¤erent existing products ("research tools"). e.g. computer hardware, crop seed Prior inventions are essential for the next-generation product. The 2nd innovator needs to receive a license on each underlying research tool Lecture 16: Cumulative innovation Econ483: Econ of Innovation & Technology, Evangeli...
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