Intellectual Property, Antitrust and Strategic Behavior

Economic growth depends in large part on technological change. Laws governing intellectual property rights protect inventors from competition in order to create incentives for them to innovate. Antitrust laws constrain how a monopolist can act in order to maintain its monopoly in an attempt to foster competition. There is a fundamental tension between these two different types of laws. Attempts to adapt static antitrust analysis to a setting of dynamic R&D competition through the use of 'innovation markets' are likely to lead to error. Applying standard antitrust doctrines such as tying and exclusivity to R&D settings is likely to be complicated. Only detailed study of the industry of concern has the possibility of uncovering reliable relationships between innovation and industry behavior. One important form of competition, especially in certain network industries, is between open and closed systems. We have presented an example to illustrate how there is a tendency for systems to close even though an open system is socially more desirable. Rather than trying to use the antitrust laws to attack the maintenance of closed systems, an alternative approach would be to use intellectual property laws and regulations to promote open systems and the standard setting organizations that they require. Recognition that optimal policy toward R&D requires coordination between the antitrust and intellectual property laws is needed.

Internal versus External Capital Markets

This paper presents a framework for analyzing the costs and benefits of internal vs. external capital allocation. We focus primarily on comparing an internal capital market to bank lending. While both represent centralized forms of financing, in the former case the financing is owner-provided, while in the latter case it is not. We argue that the ownership aspect of internal capital allocation has three important consequences: 1) it leads to more monitoring than bank lending; 2) it reduces managers' entrepreneurial incentives; and 3) it makes it easier to efficiently redeploy the assets of projects that are performing poorly under existing management.

Settlement Escrows

This article is structured as follows. Part I considers the reasons why cases do not settle, or why they do not settle more quickly than they do, and discusses how settlement escrows can facilitate settlement in each context. Part II provides a game-theoretic model of a settlement escrow in order to further demonstrate how this device can reduce delay and promote settlement in the presence of asymmetric information. In the model, the use of an escrow device results in a higher level of settlement than would occur in the absence of the escrow, and thus saves transactions costs for the parties. In addition, the expected settlement is as close or closer to the true value of the claim than in the absence of a settlement escrow. Part III discusses some subtle issues and potential problems with the implementation of settlement escrows. Part IV briefly suggests some potential applications of the model outside the context of civil litigation and Part V addresses the relationships among arbitration, mediation, and settlement escrows

Towards an Intelligent Tutor for Mathematical Proofs

Computer-supported learning is an increasingly important form of study since it allows for independent learning and individualized instruction. In this paper, we discuss a novel approach to developing an intelligent tutoring system for teaching textbook-style mathematical proofs. We characterize the particularities of the domain and discuss common ITS design models. Our approach is motivated by phenomena found in a corpus of tutorial dialogs that were collected in a Wizard-of-Oz experiment. We show how an intelligent tutor for textbook-style mathematical proofs can be built on top of an adapted assertion-level proof assistant by reusing representations and proof search strategies originally developed for automated and interactive theorem proving. The resulting prototype was successfully evaluated on a corpus of tutorial dialogs and yields good results.Comment: In Proceedings THedu'11, arXiv:1202.453

Inside Organizations: Pricing, Politics, and Path Dependence

When economists have considered organizations, much attention has focused on the boundary of the firm, rather than its internal structures and processes. In contrast, this review sketches three approaches to the economic theory of internal organization—one substantially developed, another rapidly emerging, and a third on the horizon. The first approach (pricing) applies Pigou's prescription: If markets get prices wrong, then the economist's job is to fix the prices. The second approach (politics) considers environments where important actions inside organizations simply cannot be priced, so power and control become central. Finally, the third approach (path dependence) complements the first two by shifting attention from the between variance to the within. That is, rather than asking how organizations confronting different circumstances should choose different structures and processes, the focus here is on how path dependence can cause persistent performance differences among seemingly similar enterprises