Intellectual Property and Innovation in Information and Communication Technology (ICT)

Date: 2015-11
By: Stefano Comino (University of Udine)
Fabio Maria Manenti (University of Padua)
The aim of this study is to provide a structured review of the role of IPR in fostering innovation and economic growth in the European ICT sector. Typically IPR analysis of industries focuses on patents. In practice, however, IPR strategies are developed combining the use of different IP rights. The scope of analysis considers this and looks at the joint use of patents, trademarks and industrial designs, each protecting a different type of knowledge-based asset. Based on these characteristics, the focus of the research is to provide an overview of the mechanisms typically employed in order to appropriate the returns from R&D investments. For each formal IPR, we briefly review the main contributions to the economic literature, both theoretical and empirical, on the rationale for its existence and the effects it generates on firms’ behaviour and market outcomes. We then highlight the most important emerging issues. In the final section of the study, we focus on the software industry.
Keywords: Patents, copyright, trademarks, information and communication technologies, patent thickets, open source, software, mobile applications
JEL: L11 L24 L96 O25 O31 O32 O34 O38 O52

Going Green : Framing Effects in a Dynamic Coordination Game

Date: 2015
By: Gerlagh, Reyer (Tilburg University, Center For Economic Research)
van der Heijden, Eline (Tilburg University, Center For Economic Research)
We experimentally study decision-making in a novel dynamic coordination game. The game captures features of a transition between externality networks. Groups consisting of three subjects start in a stable benchmark equilibrium with network externality. Over seven rounds, they can transit to an alternative stable equilibrium based on the other network. The alternative network has higher payoffs, but the transition is slow and costly. Coordination is required to implement the transition while minimizing costs.<br/>In the experiment, the game is repeated five times, which enables groups to learn to coordinate over time. We compare a neutral language treatment with a ‘green framing’ treatment, in which meaningful context is added to the instructions. We find the green framing to significantly increase the number of profitable transitions, but also to inhibit the learning from past experiences, and thus it reduces coherence of strategies. Consequently, payoffs in both treatments are similar even though the green framing results in twice as many transitions.<br/>In the context of environmental policy, the experiment suggests general support for ‘going green’, but we also find evidence for anchoring of beliefs by green framing; proponents and opponents stick to their initial strategies.
Keywords: cost of transition; lab experiment; dynamic stag hunt game; framing
JEL: C73 C92 O44

A Theory of Intra-Firm Group Design

Date: 2015-11
By: Tumen, Semih (Central Bank of Turkey)
I develop an intra-firm theory of group design and teamwork in the presence of peer effects. The purpose is to understand the interlinkages between intra-firm group formation and the extent of wage dispersion within the firm. Given a set of heterogeneous workers, the manager faces the challenge of allocating workers into endogenous groups (or teams) to maximize total profits. The optimal allocation features locational proximity between workers with similar productivity levels. I discuss the implications of this allocation on intra-firm wage outcomes. The main idea is that the wage paid to a single worker is determined by the productivity levels of the teammates as well as the worker’s own productivity. This means that team composition is critical to understanding the within-firm productivity and wage differentials. I show that intra-firm wage dispersion is more pronounced when workers are more alike within each team and more different across the teams. I provide numerical exercises designed to illustrate how the model’s predictions change as the key parameters are varied. One striking result is that a rise in the correlation between education and productivity (this can be interpreted as hiring workers with vocational education) leads to a decline in wage inequality within the firm. I also show that changes in the dispersion of worker efficiency lead to non-monotonic effects on within-firm wage inequality.
Keywords: group design, peer effects in the workplace, within-firm pay differences, sorting, selectivity
JEL: J31 L22 L23 M51 M52

Voting with Endogenous Information Acquisition: Theory and Evidence

Date: 2015-11
By: Sourav Bhattacharya (Department of Economics, Royal Holloway, University of London)
John Duffy (Department of Economics, University of California-Irvine)
Sun-Tak Kim (Department of Economics, National Taiwan University)
The standard model of jury or committee voting, with costless, exogenously given and noisy but informative signals regarding the true state of the world, predicts that the efficiency of group decision-making increases unambiguously with the group size. However, once signal acquisition is made a costly and endogenous decision, there are important free-riding considerations that counterbalance the information aggregation effect. If the cost of acquiring information is fixed, then rational voters have disincentives to purchase information as the group size becomes larger since the impact of their vote becomes smaller. In this paper we investigate the extent to which human subjects recognize this trade-off between information aggregation and free-riding in a laboratory experiment where we vary the group size, the cost of information acquisition and the precision of signals. We find that in most of the settings we study, free-riding incentives are weak as there is a pronounced tendency for subjects to over-acquire information relative to equilibrium predictions and we offer several possible explanations for this finding.
Keywords: Voting; Condorcet jury model; Information aggregation; Endogenous information acquisition; Experimental economics
JEL: C72 D72 D81

Asymmetric and Endogenous Within-Group Communication in Competitive Coordination Games

Date: 2015-11-05
By: Cason, Timothy
Sheremeta, Roman
Zhang, Jingjing
Within-group communication in competitive coordination games has been shown to increase competition between groups and lower efficiency. This study further explores potentially harmful effects of communication, by addressing the questions of (i) asymmetric communication and (ii) the endogenous emergence of communication. Our theoretical analysis provides testable hypotheses regarding the effect of communication on competitive behavior and efficiency. We test these predictions using a laboratory experiment. The experiment shows that although asymmetric communication is not as harmful as symmetric communication, it leads to more aggressive competition and lower efficiency relative to the case when neither group can communicate. Moreover, groups vote to endogenously open communication channels even though this leads to lower payoffs and efficiency.
Keywords: between-group competition, within-group competition, communication, coordination, contests, experiments
JEL: C70 D72 H41