Technology Economics: Innovation, Licensing, and Antitrust

28 Pages Posted: 19 Nov 2020

See all articles by Luke M. Froeb

Luke M. Froeb

Vanderbilt University - Owen Graduate School of Management

Bernhard Ganglmair

ZEW – Leibniz Centre for European Economic Research - Junior Research Group Competition and Innovation; University of Mannheim - Department of Economics; Mannheim Centre for Competition and Innovation (MaCCI)

Gregory J. Werden

affiliation not provided to SSRN

Steven Tschantz

Vanderbilt University - Department of Mathematics

Date Written: November 11, 2020

Abstract

Public policy toward innovation faces a trade-off: Increasing the compensation of successful inventors increases dynamic efficiency by spurring technological progress, but it decreases static efficiency by enlarging a wedge between price and marginal cost. In making this trade-off, public policy is guided by two insights—economic growth is the prime driver of social welfare gains, and technological progress is the prime driver of economic growth. Patent and copyright law, therefore, were designed to help inventors and authors appropriate a significant share of the value of their inventions and writings. Antitrust law neither revokes nor restricts any right granted by patent law, and antitrust law can contribute little in resolving disputes arising from commitments to license on FRAND terms.

Economic theory and empirical research into innovation and the patent system reveal a complex and varied landscape. Two robust conclusions are that too little is invested in innovation and that both the innovation process and the role of patents in the process vary greatly across industries and inventions. Depending on the precise question posed, theory predicts that monopoly can enhance or retard innovation, and data generally support the hypothesis that both monopolies and unconcentrated markets are relatively inhospitable to innovation. Although patents are critical to innovation in the pharmaceutical and chemical industries, they are unimportant in many industries, and patent protection generally has been found to have no effect on the pace of innovation.

Suggested Citation

Froeb, Luke M. and Ganglmair, Bernhard and Werden, Gregory J. and Tschantz, Steven T., Technology Economics: Innovation, Licensing, and Antitrust (November 11, 2020). The Global Antitrust Institute Report on the Digital Economy 6, Available at SSRN: https://ssrn.com/abstract=3733674 or http://dx.doi.org/10.2139/ssrn.3733674

Luke M. Froeb (Contact Author)

Vanderbilt University - Owen Graduate School of Management ( email )

401 21st Avenue South
Nashville, TN 37203
United States
615-322-9057 (Phone)
615-343-7177 (Fax)

Bernhard Ganglmair

ZEW – Leibniz Centre for European Economic Research - Junior Research Group Competition and Innovation ( email )

L7,1
Mannheim, 68161
Germany

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany

Mannheim Centre for Competition and Innovation (MaCCI) ( email )

L 7, 1
Mannheim, 68131
Germany

Gregory J. Werden

affiliation not provided to SSRN

Steven T. Tschantz

Vanderbilt University - Department of Mathematics ( email )

Nashville, TN 37240
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
82
Abstract Views
360
rank
360,308
PlumX Metrics