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The Fashion Lottery: Cooperative Innovation In Stochastic Markets, Jonathan Barnett, Gilles Grolleau, Sana El Harbi
The Fashion Lottery: Cooperative Innovation In Stochastic Markets, Jonathan Barnett, Gilles Grolleau, Sana El Harbi
Jonathan M Barnett
The fashion market is an anomaly: innovation is vigorous but original producers are substantially unprotected against imitation, which proliferates under an incomplete property regime consisting of strong trademark protections and weak design protections. We account for this anomaly through a “cooperative innovation” model where producers prefer an incomplete property regime that permits some imitation to alternative regimes that permit no imitation or all imitation, independent of budget constraints. A property regime that permits positive but limited levels of imitation operates as a form of group insurance that alleviates the risk of recoupment failure in a market characterized by demand uncertainty, …
The Host's Dilemma: Strategic Forfeiture In Platform Markets For Informational Goods, Jonathan M. Barnett
The Host's Dilemma: Strategic Forfeiture In Platform Markets For Informational Goods, Jonathan M. Barnett
Jonathan M Barnett
Voluntary forfeiture of intellectual assets—often, exceptionally valuable assets--is surprisingly widespread in information technology markets. A simple economic rationale can account for these practices. By giving away access to core technologies, a platform holder commits against expropriating (and thereby induces) user investments that support platform value. To generate revenues that cover development and maintenance costs, the platform holder must regulate access to other goods and services within the total consumption bundle. The tradeoff between forfeiting access (to induce adoption) and regulating access (to recover costs) anticipates the substantial convergence of open and closed innovation models. Organizational patterns in the software and …
Intermediaries Revisited: Is Efficient Certification Consistent With Profit Maximization?, Jonathan M. Barnett
Intermediaries Revisited: Is Efficient Certification Consistent With Profit Maximization?, Jonathan M. Barnett
Jonathan M Barnett
Private certification mechanisms are a key component of the regulatory infrastructure in the financial sector and other commercial settings. It is generally assumed that certification intermediaries have profit-based incentives to deliver accurate information to the certified market. But this view does not account for repeated failures in certification markets. Those failures can be explained by an inherent defect in the incentive structure of certification intermediaries: entry barriers both support and undermine the consistent supply of accurate information to the certified market. Certification markets tend to converge on a handful of providers protected by switching costs, product opacity and reputational noise. …
Intellectual Property As A Law Of Organization, Jonathan M. Barnett
Intellectual Property As A Law Of Organization, Jonathan M. Barnett
Jonathan M Barnett
The incentive thesis for patents is challenged by the existence of alternative means by which firms can capture returns on innovation. Taking into account patent alternatives yields a robust reformulation of the incentive thesis as mediated by organizational form. Patents enable innovators to make efficient selections of firm scope by transacting with least-cost suppliers of commercialization inputs. These expanded transactional opportunities reduce the minimum size of the market into which any innovator—or the supplier of any other technological or production input—can attempt entry. Disaggregation of the innovation and commercialization process then induces the formation of secondary markets in disembodied technology …
Property As Process: How Innovation Markets Select Innovation Regimes, Jonathan M. Barnett
Property As Process: How Innovation Markets Select Innovation Regimes, Jonathan M. Barnett
Jonathan M Barnett
It is commonly asserted that innovation markets suffer from excessive intellectualproperty protections, which in turn stifle output. But empirical inquiries can neither confirm nor deny this assertion. Under the “agnostic” assumption that we cannot assess directly whether intellectual-property coverage is excessive, an alternative query is proposed: can the market assess if any “propertization outcome” is excessive and then undertake actions to yield a socially preferable outcome? Grounded in the “bottom up” methodology of new institutional economics, this process-based approach takes the view that innovator populations make rent-seeking investments that continuously “select” among a range of “innovation regimes” that trade off …