Standards and the Incentives for Innovation
27 Pages Posted: 3 Apr 2013
Date Written: January 18, 2013
We model the economics of the effects of standards on incentives for innovative investment. We use survey data from industrial respondents to parameterize our model, allowing us to explain and predict effects of technology standards on investment in the development of technology and thereby assess the benefits and costs of technology standards in a market equilibrium setting. Having parameterized the model with the responses of industry to our survey, we can also describe the differences in effects of standards for different types of firms and for different types of industrial research, and we can simulate the effects of stronger or weaker intellectual property (IP) protection, using the industrial responses to answer the question of how the opposing effects from changes in IP protection on balance affect innovative investments. We find that the net effects of standards for IP protection are positive, increasing innovative investments and increasing their private and social value.
Keywords: standards, innovation, standards setting organizations (SSOs), research and development (R&D), national laboratories
JEL Classification: O31, O33, O34, O38
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