Transcript How much do innovation strategies differ across firms

From patent prices to
innovation prizes
(Or, Prizes for innovation: what will
it cost?)
Bart Verspagen (Eindhoven University
of Technology, and UNU Merit)
(based on joint work with Alfonso
Gambardella & Dietmar Harhoff)
My background
• Economics of technological change
– patents
• Patval Survey
– A new approach to measuring the value of
patents
– Yields a direct estimate of patent value
(whereas previous methods were indirect)
– Use to say something about the costs of a prize
system
Estimating the costs of a prize
system
• "What would be the minimum price (prize) that
the patent holder would have accepted to
transfer all atent rights, at the time of grant of
the patent, assuming all current knowledge
about the patent was available?"
• Respondents were inventors
• See our paper that compares these estimates to
others available, and estimates the determinants
of patent value
From patent prices to prizes
• I assume that a prize system means that the
government would buy all patents at the Patval
price, and put them in the public domain
– This would make the innovations available in
competition, and hence avoid dead-weight loss
• I estimate what the additional tax burden would
be to finance this system
• I would argue that this provides at least an
estimate of the order of magnitude of the costs of
a prize system for innovations that are now not
implemented (patented), e.g., neglected diseases
The patent premium
• Arora, Ceccagnoli & Cohen: even without a
patent, the innovation has a value, the
patent raises this value (=patent premium)
• Patent premium = difference between payoff with patent (monopoly) and using the
innovation in a (more) competitive
environment
• Our Patval question asks for the total
value, including patent premium
How high is the patent premium?
• Arora, Ceccagnoli & Cohen:
– Average
• 1.66 – 1.86 (1.66)
• 1.99 – 2.45 (2.22)
– Pharma
• 1.73 / 2.29
The patent value distribution,
1993-97
3500
9000
8000
3000
2500
DE
6000
2000
5000
1500
4000
3000
1000
frequency (total)
frequency (countries)
7000
ES
FR
IT
NL
UK
Tot
2000
500
1000
0
0
15
65
200
650
2000
6500
20000 65000 200000 300000
Value interval (means, 1000 euro)
What does it cost to buy all these
patents (in % of 1997 GDP)?
DE
ES
FR
IT
NL
UK
Tot
All
0.4
0.1
0.4
0.5
0.9
1.0
0.5
Appl.
0.2
0.1
0.1
0.2
0.4
0.4
0.2
Health
0.01 0.02 0.01 0.01 0.07 0.08 0.03
Health
-appl.
0.01 0.01 0.004 0.003 0.04 0.05 0.01