Determinants of R&D and Its Productivity: Identifying Demand and Supply Channels (First revision)

Identifying whether an exogenous factor affects R&D from a demand side or from a supply side is an important issue. This paper, first, theoretically shows that a favorable change in either side can reduce the R&D productivity in equilibrium, so that the reduced form estimation cannot provide a clear identification. Secondly, it estimates both structural and reduced form patent production functions, based on instrumental variables approach, using a large database on Japanese firms. According to the estimation, while the initial firm size, market concentration or export orientation increases R&D, none of them significantly shifts the structural patent production function.R&D productivity, patent, firm size, competition

Determinants of high-royalty contracts and the impact of stronger protection of intellectual property rights in Japan

This paper first reviews how Japan has strengthened the protection of intellectual property rights (IPRs), focusing on the expansion of the patentable subject matter, the restriction of the possibility of compulsory licensing, stronger deterrence against infringement and the introduction of the doctrine of equivalents. Second, based on the statistical analysis of sector-level panel data, it shows that (1)R&D intensity of domestic industry, trademark licensing, cross-licensing and, to a smaller degree, monopoly provisions are the significant determinants of the incidence of high-royalty contracts, and (2)Stronger protection of intellectual property rights looks to have increased the incidence of high-royalty contracts in the latter part of 1990s in the Japanese industries for which patent is important for appropriability.Intellectual property rights, Licensing contract, Appropriability, Patent

R&D and Market Value: Appropriability vs. Preemption

The recent empirical studies on innovation and market value suggest that R&D has a strong complementarity with market share in the market valuation of firms. Blundell, Griffith and Reenen (1999) argue that it represents the strategic preemptive effect, while Hall and Vopel (1997) suggest a Schumpeterian reason (the cost of financing R&D is lower for large firms). The theoretical framework of these studies is the classical work by Griliches (1981), which postulates that the market value of firm is given by the sum of the values of physical capital and R&D capital with respective multipliers. However, non-rivalry in using new knowledge within a firm makes this framework highly questionable. This paper examines the nexus between R&D and market value, based on a simple but new structural model. Major findings are the following. First, the new model shows that the market evaluation of R&D may well be high for a firm with a large market share, simply due to its appropriability advantage. Second, our estimation based on the data of the Japanese firms shows that the new specification performs better. Third, it shows that there is no statistical support for the prevalence of preemption effect.R&D, market value, appropriability, preemption

Patent quality, cumulative innovation and market value: Evidence from Japanese firm level panel data

We examine empirically how patent quality in terms of forward citation and science linkage affect the market value of a firm. We find that both indicators affect the market value of a firm significantly even if we extensively control the effects of the other major determinants of the market value, including R&D investment and current return on asset. In addition, the forward citation affects the market value more in cumulative innovation area such as in IT, consistent with a theoretical proposition that the value of having a dependent patent is larger in the industry where innovation is cumulative among firms.patent quality, market value, forward citation, science linkage, cumulative innovation

Reducing false wake-up in contention-based wake-up control of wireless LANs

This paper studies the potential problem and performance when tightly integrating a low power wake-up radio (WuR) and a power-hungry wireless LAN (WLAN) module for energy efficient channel access. In this model, a WuR monitors the channel, performs carrier sense, and activates its co-located WLAN module when the channel becomes ready for transmission. Different from previous methods, the node that will be activated is not decided in advance, but decided by distributed contention. Because of the wake-up latency of WLAN modules, multiple nodes may be falsely activated, except the node that will actually transmit. This is called a false wake-up problem and it is solved from three aspects in this work: (i) resetting backoff counter of each node in a way as if it is frozen in a wake-up period, (ii) reducing false wake-up time by immediately putting a WLAN module into sleep once a false wake-up is inferred, and (iii) reducing false wake-up probability by adjusting contention window. Analysis shows that false wake-ups, instead of collisions, become the dominant energy overhead. Extensive simulations confirm that the proposed method (WuR-ESOC) effectively reduces energy overhead, by up to 60% compared with state-of-the-arts, achieving a better tradeoff between throughput and energy consumption

Improving performance of pedestrian positioning by using vehicular communication signals

Pedestrian-to-vehicle communications, where pedestrian devices transmit their position information to nearby vehicles to indicate their presence, help to reduce pedestrian accidents. Satellite-based systems are widely used for pedestrian positioning, but have much degraded performance in urban canyon, where satellite signals are often obstructed by roadside buildings. In this paper, we propose a pedestrian positioning method, which leverages vehicular communication signals and uses vehicles as anchors. The performance of pedestrian positioning is improved from three aspects: (i) Channel state information instead of RSSI is used to estimate pedestrian-vehicle distance with higher precision. (ii) Only signals with line-of-sight path are used, and the property of distance error is considered. (iii) Fast mobility of vehicles is used to get diverse measurements, and Kalman filter is applied to smooth positioning results. Extensive evaluations, via trace-based simulation, confirm that (i) Fixing rate of positions can be much improved. (ii) Horizontal positioning error can be greatly reduced, nearly by one order compared with off-the-shelf receivers, by almost half compared with RSSI-based method, and can be reduced further to about 80cm when vehicle transmission period is 100ms and Kalman filter is applied. Generally, positioning performance increases with the number of available vehicles and their transmission frequency

Coalition Formation for a Consortium Standard Through a Standard Body and a Patent Pool: Theory and Evidence from MPEG2, DVD and 3G

We examine why cooperation among essential patent holders for a standard may not occur, despite significant gains for patent holders and users of the standard. Utilizing Maskin's (2003) framework, we show that a grand coalition can be implemented only if the number of patent holders (n) is small. When n is large, emergence of an outsider is inevitable, so that voluntary sequential negotiation cannot secure the socially efficient outcome. We also show that a firm specialized in research is more likely to become an outsider. We discuss the MPEG2, DVD and 3G patent pools in light of these results.

The Utility Standard and the Patentability of Intermediate Technology

We explore the consequences of the utility requirement on speed of innovation, welfare and public policy. A weak utility requirement means that an intermediate technology with no immediate application or commercial value is patentable. Using a model of two stage innovation with free entry and trade secrecy, we identify cases when patentability is beneficial to society. Although a firm may undertake basic research protected by trade secrecy, patentability is still desirable when spillover is high and innovation costs are high. However, patentability becomes less desirable as basic research costs decrease. We also show that high value of final technology by itself does not favor non-patentability and identify condition when it does.