Events

Max Planck Institute for Innovation and Competition, Room 313

Schumpeter claims that recessions are periods of “creative destruction”, concentrating innovation that is useful for the long-term growth of the economy. However, previous research finds that standard measures of innovation, such as R&D expenditures or number of patents, concentrate in booms. We argue that these standard measures do not capture the different dimensions of firms’ innovative search strategies. We introduce a model of innovative exploration and exploitation over the business cycle and find evidence that exploitation strategies are more prevalent in booms while exploration strategies are more prevalent in recessions. Results are stronger for more cyclical and less financially constrained firms. In contrast to the Schumpeterian view of creative destruction, we show that young and old firms contribute equally to the countercyclicality of innovation. Taken together, these results raise questions on macroeconomic stability as a policy goal.

Contact: Fabian Gaessler

Max Planck Institute for Innovation and Competition, Room 313

In evaluating the effectiveness of R&D subsidies, the literature so far has completely neglected the possibility of misappropriation of public funds. This paper contributes to the literature by evaluating the causal effect of R&D subsidies on R&D expenditures when monitoring is weak and misappropriation takes place due to moral hazard behavior. Our analysis is based on Chinese firm-level data for the period 2001-2011. Misappropriation is a major concern as we calculate that 42% of grantees misused R&D subsidies, corresponding to 53% of the total amount of R&D subsidies. In a setting with one-sided noncompliance to funding contract rules, we differentiate between the intention-to-treat (ITT) effect and the complier average causal effect (CACE). The ITT shows how effective the R&D policy was in practice when misappropriation exists. The CACE, in contrast, depicts how effective the policy could have been without misappropriation and thus is a measure for the efficacy of the R&D subsidy policy. Combining entropy balancing and IV methods to estimate both ITT and CACE, the ITT results show mild partial crowding out of R&D expenditures. Most strikingly, however, the CACE turns out to be more than twice as large as the ITT and confirms additionality of R&D subsidies. Thus, misappropriation of R&D subsidies considerably undermines the efficacy of Chinese R&D programs. (joint work with Philipp Boeing)

Contact: Fabian Gaessler

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

We investigate the impact of the introduction of patent rights for software inventions in the U.S. on academic computer scientists’ publication output. Difference-in-difference estimations that compare U.S. academic computer scientists working on software to (1) U.S. academic scientists working on hardware and (2) European university scientists working on software reveals that the introduction of software patents in the U.S. led to a decrease of (citation-weighted) publications as compared to U.S. computer scientists working on hardware and as compared to the European peers. The effect is stronger for scientists at the left-hand side of the ability distribution. This pattern is consistent with a simple model of time allocation between patenting and publishing. (joint work with Laurent Bergé and Thorsten Doherr)

Contact: Felix Pöge

Max Planck-Institute for Innovation and Competition, Room E10

Moderation: Jörg Hoffmann 

From 10 to 11 December 2018, the Max Planck Institute for Innovation and Competition will organize the first junior researcher workshop:

From Science to Innovation

The goal of the workshop is to stimulate a rigorous in-depth discussion of a number of selected research papers. It offers PhD students and junior Post-docs an opportunity to present their work, receive feedback and connect with peers from other departments. Each paper will be discussed by a discussant. The workshop will be held at the Max Planck Institute for Innovation and Competition, room E10.

Overview
The workshop will focus on the following areas:

• Economics of Science and Innovation
  

• Human Capital in the Science Production Function
• Financial Incentives in Science
• Corporate Strategy to Access Scientific Knowledge
• Organization of Innovation within Firms
• Knowledge Spillovers between Firms




• Legal Analysis of Knowledge Approbability
  

• Knowledge Appropriability in R&D Partnerships
• Big Data Ownership and Accessability

We are happy to announce Jeff Furman (Boston University & NBER) as our keynote speaker who will also provide feedback during sessions.

Program
The full program is available here. Should you be interested in attending the workshop without paper presentation, please contact us directly no later than October 31. There is only a small number of places available.

Max Planck Institute for Innovation and Competition, Room E10

Further information
Any questions concerning the From Science to Innovation workshop should be directed to Dennis Byrski.

Full-day workshop

Contact: Dr. Matthias Lamping

Website IPDR-Forum

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

 Considering that both patents and trade secrets can promote knowledge diffusion via licensing, we compare patents and secrets on the way they facilitate diffusion through non-exclusive licensing. This comparison is important because AI algorithms are not patentable. Patents differ from trade secrets on the easiness of imitation when licensed to many downstream producers. In view of this, we argue that secrets are better in defending one’s monopoly under the threat of imitation, inducing market failure on the diffusion of AI. We also find a non-linear relationship between patent strength and the diffusion of ideas, i.e., patents of intermediate patent strength are best as diffusion instruments.

Contact: Dr. Fabian Gaessler

Toshiko Takenaka, Hunter Simpson Professor of Technology Law, University of Washington School of Law

Max Planck Institute for Innovation and Competition, Room E10

We would like to kindly ask you to register before 21 November by sending an e-mail to elisabeth.amler(at)ip.mpg.de.

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

We theoretically derive a simple rule for the optimal patent breadth and duration of pharmaceutical patents. The rule requires only data on generic firms’ investments in imitation prior to the expiry of originator patents. We then test the rule using a unique patent level data set from the US. Paragraph IV challenges offer a clear metric of imitation and patent term extensions create the variation in patent term. Using two quasi-experimental approaches and newly constructed data, we document that extending patent length increases incentives to imitate whereas broadening patents reduces these incentives. Our results together suggest that effective terms of new drug patents should be made shorter and delays in commercialization of new drugs should be compensated by increasing breadth.

Contact: Felix Poege