Events

Max Planck Institute for Innovation and Competition, Munich, Room 313

Scholarly work seeking to understand academics’ commercial activities often draws on abstract notions of the academic reward system and of the representative scientist. Few scholars have examined whether and how scientists’ motives to engage in commercial activities differ across fields. Similarly, efforts to understand academics’ choices have focused on three self-interested motives – recognition, challenge, and money – ignoring the potential role of the desire to have an impact on others. Using panel data for a national sample of over 2,000 academics employed at U.S. institutions, we examine how the four motives are related to commercial activity, measured by patenting. We find that all four motives predict patenting, but their role differs systematically between the life sciences, physical sciences, as well as engineering and applied sciences. These field differences are consistent with differences in the rewards from commercial activities, as well as with field differences in the opportunity costs of time spent away from “traditional” research, reflecting the degree of overlap between traditional and commercializable research. We discuss implications for policy makers, administrators, and managers as well as for future research on the scientific enterprise.

Contact person: Michael Rose

Max Planck Institute for Innovation and Competition, Munich, Room 313

In absence of perfectly enforceable contracts economic theory predicts largely inefficient market outcomes. The solution to this problem is twofold: either costly contracts and regulations or trust and reciprocal behavior both result in stable and efficient equilibria. “Satisfaction guaranteed”, promising a full refund to the discontent customer, serves as a trust building device which has previously been shown to significantly improve market performance. In this paper, however, we show that the previous models of full refund guarantees fail to capture important features for either side of the contract. As a matter of fact, the guarantee does not necessarily reduce but rather realign the transaction risks. We assume that the possible temporary utilization of the contracted good creates virtually no costs for the customer but imposes considerable transaction costs on the seller. This creates a situation where the benefits of increased transactions through reassured customers have to countervail the possible losses from fraud in order to facilitate an efficient market equilibrium.

Contact person: Marina Chugunova

Max Planck Institute for Innovation and Competition, Munich, Room 313

br />We study the effects of immigration on the inventive performance of Switzerland, which, in between 1999 and 2007, first signed then gradually implemented an open border policy agreement with the European Union. During the transition phase, Switzerland progressively lifted all restrictions concerning foreign commuters from nearby countries, mostly highly skilled workers, whose visas were valid only for selected regions and whose employers were disproportionally located close to its international borders. Based on a rich dataset of patent applications filed at the European Patent Office (EPO) through the Patent Cooperation Treaty (PCT) and a difference-in-differences estimation strategy, we find that the policy shock changed the migrant-native composition of the inventive workforce, and increased the quantity (albeit only in certain technological sectors) and the quality of Swiss patents. We also highlight an increase in the average size of R&D teams behind each patent application, a potential dynamic effect of skill-gap STEM immigration on domestic firms.

Contact person: Rainer Widmann

Room E10, Max Planck Institute for Innovation and Competition

Abstract
Competition authorities in Europe have taken enforcement action against the GAFA-companies (Google, Amazon, Facebook and Apple). The “theory of harm” in such cases remains vague, however, and it is disputed whether the cases are really cases for competition law enforcement or should be dealt with in other areas of the law – if there is any problem at all. The submission in the talk is that the agencies react to a shift in strategy by the so-called “super-platforms”: They are no longer acting as neutral intermediaries that primarily reduce transaction costs but meddle with the decision-making process of consumers and other companies.

In his talk, Professor Podszun submits economic and normative elements for a theory of harm in such cases. In his view, the agencies preserve the decision-making capacity of market participants – “digital autonomy” is, in his view, a key element of markets. Still, the question remains how competition law should react to the growing concerns with digital ecosystems. The talk therefore shall also serve as an impulse for discussing the overhaul of competition law that is under debate in Europe now.

If you plan on attending, we kindly request that you register with Ms. Ulrike Stubenvoll (ulrike.stubenvoll(at)miplc.de) at your earliest convenience.

 

Max Planck Institute for Innovation and Competition, Room E10

Prof. Sapna Kumar is law professor in the USA and at present guest researcher in the Department for Innovation and Entrepreneurship Research.

Moderation: Pedro Dias Batista

Max Planck Institute for Innovation and Competition, Munich, Room 313

Innovation is a driver of many widely desired market outcomes, including higher quality, lower costs, more choices, greater efficiency and economic growth. Meanwhile, competition law is supposed to safeguard and foster competition in those markets. It therefore should play an important role in shaping incentives to innovate. Analyses of the effect of competition law on innovation, however, are scarce and suffer from two limitations. Theoretically, existing work—mostly in the law-and-economics tradition—tends to ignore the political and policy context of competition law. Empirically, existing analyses are almost all based on U.S. data—and they yield mixed results. This paper examines the relationship between competition law and innovation (as measured by patent filings) in its political context, and it does so in cross-sectional and panel analyses for a large number of jurisdictions. We find that competition law indeed has a strongly statistically significant and positive effect on the rate of innovation cross-nationally and over time—but only in the context high levels of state capacity and judicial independence.

Contact person: Felix Poege

Second annual conference dealing with collecting societies, geographical indications and questions of technology transfer

With its "Smart IP for Latin America" initiative, the Institute promotes academic research on intellectual property issues in Latin America in cooperation with local academic and public institutions. The focus lies on legal and economic issues relating to the significance and impact of different IP Standards in the region and the influence of such regulations on the dynamics of competition. At this year's annual conference, which is organized in cooperation with the Universidad de los Andes, the legal framework for collecting societies, geographical indications and technology transfer will be on the agenda.


Contact: Matthias Lamping

Max Planck Institute for Innovation and Competition, Munich, Room 313
 

Given the relevance that governments and public bodies give to the patent system, there is surprisingly little evidence on the actual role played by patent rights in stimulating knowledge diffusion and the generation of follow-on innovations. The main objective of the present paper is to provide new, robust evidence on this research topic. To this aim, we take advantage of a body of United States federal law enacted in 1951 with the objective of preventing disclosure of new inventions that may represent a threat to the national security. Estimation results show a negative and statistically significant relationship between the enforcement of a secrecy order and knowledge diffusion, thus supporting the idea that the patent system is conducive to technology diffusion (joint work with Laurent Bergé and Thorsten Doherr).

Contact: Rainer Widmann, Ph.D.

Max Planck Institute for Innovation and Competition, Munich, Room 313

Decision-support systems can influence people in various domains of life. Firms have started implementing these systems via chatbots and other natural language-based assistants. While benefiting from these services, individuals provide sensitive and valuable data to the private industry. Using this data, companies may generate additional profits. Moreover, by making their data available, individuals may also promote the common good. Policymakers should provide efficient tools to let the public collectively benefit from their data. This paper provides first insights on how people may voluntarily provide data to a decision-support system in order to contribute to a social good. In particular, we have designed three online studies to test (1) whether providing personal data to a decision-support system for a common good is a social dilemma, (2) how the willingness to voluntarily provide data is subject to the risk of data getting leaked, the effectiveness of data provision, the developing party and the human-supervision of the underlying algorithm and (3) how differences in cognitive moral judgment (reason-based/ emotion-based) and the perceived moral obligation to provide data for a common good effect the willingness to make data available. In all studies, we compare two social goods: a sustainable environment and a sustainable health system.

Contact: Dr. Michael Rose

Max Planck Institute for Innovation and Competition, Munich, Room 313
 

The FDA maintains post-approval safety surveillance programs to monitor the safety of drugs. As adverse events are reported, they may choose to intervene and change the safety labeling associated with a drug. How do markets respond to these regulatory changes? We provide causal evidence that these regulatory interventions have a negative impact on aggregate demand for pharmaceuticals. We find that aggregate demand declines by 16.9 percent within two years of a relabeling event. After accounting for all plausible substitution patterns by physicians along with competitor actions, aggregate demand declines by 4.7 percent. Critically, this decline represents consumers that leave the market. The overall effect appears to be driven by ‘high-intensity’ markets or those with significant relabeling activity. Results control for the level of advertising and are robust to variation across types of relabeling, market sizes, and levels of competition. Implications for upstream innovation and public policy are highlighted (joint work with Xin Yan and Chirantan Chatterjee).

Contact: Michael Rose, Ph.D.