Market Reactions to Intellectual Property Infringement Litigations in the Information Technology Industry

The information technology industry is characterized by constant innovation and substantial expenditures on research and development. Firms attempt to protect their investment in research and development and retain a competitive edge in the industry by obtaining patents and copyrights. These intellectual properties are important intangible assets that are evaluated by the financial markets and can be observed in the market price at which the common stock is traded. If a firm announces a lawsuit claiming that its intellectual property has been violated, the markets have to form an opinion about several matters, viz. the merit of the lawsuit, the probability of a verdict favoring either party, the damages which will be awarded, if any, and managerial time and effort expended in the process. We are unable to observe these inputs, but can measure the impact of these factors on the stock price

The Impact of Uncertain Intellectual Property Rights on the Market For Ideas: Evidence From Patent Grant Delays

This paper considers the impact of the intellectual property (IP) system on the timing of cooperation/licensing by start-up technology entrepreneurs. If the market for technology licenses is efficient, the timing of licensing is independent of whether IP has already been granted. In contrast, the need to disclosure complementary (yet unprotected) knowledge, asymmetric information, or search costs may retard efficient technology transfer. In these cases, reductions in uncertainty surrounding the scope and extent of IP rights may facilitate trade in the market for ideas. We employ a dataset combining information about cooperative licensing and the timing of patent allowances (the administrative event when patent rights are clarified). While pre-allowance licensing does occur, the hazard rate for achieving a cooperative licensing agreement significantly increases after patent allowance. Moreover, the impact of the patent system depends on the strategic and institutional environment in which firms operate. Patent allowance seems to play a particularly important role for technologies with longer technology lifecycles or that lack alternative mechanisms such as copyright, reputation, or brokers. The findings suggest that imperfections in the market for ideas may be important, and that formal IP rights may facilitate gains from technological trade.

Power in the Multinational Corporation in Industry Equilibrium

Recent theories of the multinational corporation introduce the property rights model of the firm and examine whether to integrate our outsource firm activities locally or to a foreign country. This paper focus instead on the internal organization of the multinational corporation by examining the power allocation between headquarters and subsidiaries. We provide a framework to analyse the interaction between the decision to serve the local market by exporting or FDI, market acces and the optimal mode of organization of the multinational corporation. We find that subsidiary managers are given most autonomy in their decision how to run the firm at intermediate levels of local competition. We then provide comparative statics for changes in fixed FDI entry costs and trade costs, information technology, the number of local competitors, and in the size of the local market

New Forms of Competition - How Markets work in the Information Society

In this study we analyze how markets work in the Information Society. In particular we concentrate on three important markets: the software market, the broadcasting market and "technology markets" where intellectual property rights can be traded. All these markets are characterized by modes of competition that are rather unorthodox and beyond simple Cournot or Bertrand models. Therefore, extended models are needed to gain insights about competition in the Information Society.Competition; Information Society; Open Source Software; Television; Intellectual Property Rights

Markets for Technology and Their Implications for Corporate Strategy.

Although market transactions for technologies, ideas, knowledge or information are limited by several well-known imperfections, there is evidence that they have become more common than in the past. In this paper we analyze how the presence of markets for technology conditions the technology and corporate strategy of firms. The first and most obvious implication is that markets for technology increase the strategy space: firms can choose to license in the technology instead of developing it in-house or they can choose to license out their technology instead of (or in addition to) investing in the downstream assets needed to manufacture and commercialize the goods. The implications for management include more proactive management of intellectual property, greater attention to external monitoring of technologies, and organizational changes to support technology licensing, joint-ventures and acquisition of external technology. For entrepreneurial startups, markets for technology make a focused business model more attractive. At the industry level, markets for technology may lower barriers to entry and increase competition, with important implications for the firms' broader strategy as well.

The economic evolution of petroleum property rights in the United States.

We examine Harold Demsetz's (1967) prediction that property rights emerge and are refined as the benefits of doing so exceed the costs in the context of oil and gas resources in the U.S. Familiar influences on the development of petroleum property rights, technology, market demand, and politics, provide support for the hypothesis, and those issues are examined. Our primary contribution is to demonstrate the important role of a less familiar factor, the presence in the reservoir of both oil and gas with differentially volatile prices. This factor has affected the nature of the property rights assigned with unitization, an institutional arrangement to internalize the common pool externality. Information asymmetries and conflicting price expectations have resulted in unit agreements that would not have been predicted in a strict neo-classical sense. Our analysis provides new insights regarding the nature of voluntary unitization contracts, inherent limits to producers' ability to internalize externalities, and the welfare implications of compulsory unitization.

Emerging Markets in Water: A Comparative Institutional Analysis of the Central Valley and Colorado-Big Thompson Projects

Water trading is a potential means to improve the productivity of developed water supplies and reconcile competing uses. Economic theory suggests that markets evolve in response to changes in supply and demand. This prediction is at odds with observed disparities in the pace of market development in regions facing similar pressures on scarce water resources. A dramatic example of this disparity is found in the regions served by the California Central Valley Project and the Colorado-Big Thompson Project.This article argues that the differences in market activity in the two areas can be explained largely by the underlying water allocation institutions. The article identifies key institutional features that affect the transaction costs of water trading and examines the rootsof the institutional diferences. The institutions governing market transactions today are largely a function of pre-existing property rights and political battles to build consensus and obtain federal financing for the projects. The article highlights the path-dependent nature of water allocation institutions and trading, but also suggests that complex inter-regional markets could still develop in California given ever-increasing competition for scarce water resources and advances in information technology that lower market transaction costs

From knowledge to wealth : transforming Russian science and technology for a modern knowledge economy

Russia possesses a sophisticated science and technology (S&T) infrastructure (research capability, technically trained workforce, and technical research universities) which, even today, is a world leader in many fields. Despite this world class basic research capacity, Russia's exports are primarily raw materials. At a time when wealth depends to an increasing degree on knowledge, Russia does not have an effective system for converting its scientific capacity into wealth. Russia's S&T resources are isolated bureaucratically (they are deployed in the rigid hierarchical system devised in the 1920s to mobilize resources for rapid state-planned industrial development and national defense), functionally (there are few links between the supply of S&T output by research institutes and the demand for S&T by Russian or foreign enterprises), and geographically (many assets are located in formerly closed cities or isolated science/atomic cities). Overcoming these inefficiencies and adjusting the S&T system to the demands of a market economy will require a major program of institutional and sectoral reform. Part I of this paper describes the ambiguous legacy of the Soviet S&T system and the status of the Russian S&T sector after 10 years of transition. Part II describes the evolution of the Russian system of intellectual property rights protection from Soviet times to the present and argues that Russia will never develop a successful commercialization program until it clarifies the ownership of the large stock of intellectual property funded with federal budget resources. Part III outlines a comprehensive 10-point sectoral reform program to improve the efficiency of government research and development spending and link the Russian S&T system with market forces.ICT Policy and Strategies,Public Health Promotion,Scientific Research&Science Parks,Agricultural Knowledge&Information Systems,General Technology,ICT Policy and Strategies,Scientific Research&Science Parks,Science Education,Agricultural Knowledge&Information Systems,General Technology

Power in the Multinational Corporation in Industry Equilibrium

Recent theories of the multinational corporation introduce the property rights model of the firm and examine whether to integrate our outsource firm activities locally or to a foreign country. This paper focus instead on the internal organization of the multinational corporation by examining the power allocation between headquarters and subsidiaries. We provide a framework to analyse the interaction between the decision to serve the local market by exporting or FDI, market acces and the optimal mode of organization of the multinational corporation. We find that subsidiary managers are given most autonomy in their decision how to run the firm at intermediate levels of local competition. We then provide comparative statics for changes in fixed FDI entry costs and trade costs, information technology, the number of local competitors, and in the size of the local market.foreign direct investment; power allocation in the firm; international trade and the organization of production

Power in the Multinational Corporation in Industry Equilibrium

Recent theories of the multinational corporation introduce the property rights model of the firm and examine whether to integrate our outsource firm activities locally or to a foreign country. This paper focus instead on the internal organization of the multinational corporation by examining the power allocation between headquarters and subsidiaries. We provide a framework to analyse the interaction between the decision to serve the local market by exporting or FDI, market acces and the optimal mode of organization of the multinational corporation. We find that subsidiary managers are given most autonomy in their decision how to run the firm at intermediate levels of local competition. We then provide comparative statics for changes in fixed FDI entry costs and trade costs, information technology, the number of local competitors, and in the size of the local market.foreign direct investment; power allocation in the firm; international trade and the organization of production