Private Ordering and Public Energy Innovation Policy

44 Pages Posted: 27 Oct 2008 Last revised: 9 Sep 2009

See all articles by Daniel R. Cahoy

Daniel R. Cahoy

Pennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration

Leland Glenna

The Pennsylvania State University

Abstract

Nascent development in alternative energy technologies can be greatly affected by intellectual property environments. Tight control over foundational patent rights by a few companies can hold up commercialization. Conversely, widely dispersed ownership can create thickets that discourage innovation investment ex ante. Given the high technology nature of the most promising alternative energy proposals, such IP impacts are of great concern. This article considers the issue in the specific context of the most widely used alternative fuel source, ethanol-based biofuels. It finds that the ownership environment is quite diverse and theoretically ripe for a so-called anticommons effect. However, using analogies to general agricultural biotechnology, the article demonstrates that the biofuel patent environment is likely to undergo a striking transformation through the effects of private ordering. It articulates a general model of ordering behavior and suggests the most important conditions that facilitate ordering in particular industries. The article concludes that market-based reordering of patent ownership, although not without negatives, may promote efficient commercialization and blunt the need for government intervention in certain alternative energies. It should be factored into any rational public energy policy.

Keywords: patents, alternative energy, biofuel, anticommons, intellectual property, ethanol

JEL Classification: K11, Q34, Q40, Q42

Suggested Citation

Cahoy, Daniel R. and Glenna, Leland, Private Ordering and Public Energy Innovation Policy. Florida State University Law Review, Vol. 36, Issue 3, pp. 415-458, 2009, Available at SSRN: https://ssrn.com/abstract=1289444

Daniel R. Cahoy (Contact Author)

Pennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration ( email )

310 Business Building
University Park, PA 16802
United States
814-865-6205 (Phone)
814-865-6284 (Fax)

Leland Glenna

The Pennsylvania State University ( email )

308 armsby
university park, PA 16802
United States

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