Publications

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    Suzanne Scotchmer, Stephen M. Maurer
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    ABSTRACT: We address the patent/antitrust conflict in licensing and develop three guiding principles for deciding acceptable terms of license. Profit neutrality holds that patent rewards should not depend on the rightholder's ability to work the patent himself. Derived reward holds that the patentholder's profits should be earned, if at all, from the social value created by the invention. Minimalism holds that licenses should not be more restrictive than necessary to achieve neutrality. We argue that these principles are economically sound and rationalize some key decisions of the twentieth century such as General Electric and Line Material. Copyright 2006, Oxford University Press.
    American Law and Economics Review 12/2006; 8(3):476-522. · 1.14 Impact Factor
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    Stephen M. Maurer, Suzanne Scotchmer
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    ABSTRACT: Open source methods for creating software rely on developers who voluntarily reveal code in the expectation that other developers will reciprocate. Open source incentives are distinct from earlier uses of intellectual property, leading to different types of inefficiencies and different biases in R&D investment. Open source style of software development remedies a defect of intellectual property protection, namely, that it does not generally require or encourage disclosure of source code. We review a considerable body of survey evidence and theory that seeks to explain why developers participate in open source collaborations instead of keeping their code proprietary, and evaluates the extent to which open source may improve welfare compared to proprietary development.
    05/2006;
  • Stephen M. Maurer, Suzanne Scotchmer
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    ABSTRACT: Patents differ from other forms of intellectual property in that independent invention is not a defense to infringement. We argue that the patent rule is inferior. First, the threat of entry by independent invention would induce patentholders to license the technology, lowering the market price. Provided independent invention is as costly as the original cost of R&D, the market price will still be high enough to cover the patentholder's costs. Second, a defense of independent invention would reduce the wasteful duplication of R&D effort that occurs in patent races. In either case, the threat of independent invention creates a mechanism that limits patentholders' profits to levels commensurate with their costs of R&D.
    12/2003;
  • Eddie Dekel, Suzanne Scotchmer
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    ABSTRACT: this paper we explore an evolutionary model where preferences, in particular attitudes toward risk, are endogenously determined. In economics, preferences are simply rules for choosing among feasible consumption bundles. If successful" choice rules become more prevalent in Article ID jeth.1999.2537, available online at http:##www.idealibrary.com on 125 0022-0531#99 #30.00 Copyright # 1999 by Academic Press All rights of reproduction in any form reserved. * We are grateful to Drew Fudenberg, Wulong Gu, Hans Hvide, Arthur Robson, Bill Zame, two referees, and the associate editor for helpful comments. We acknowledge financial support from the NSF, IBER, and Tel Aviv University
    09/2003;
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    Stephen M. Maurer, Suzanne Scotchmer
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    ABSTRACT: There is growing public interest in alternatives to intellectual property including, but not limited to, prizes and government grants. We argue that there is no single best mechanism for supporting research. Rather, mechanisms can only be compared within specific creative environments. We collect various historical and contemporary examples of alternative incentives, and relate them to models of the creative process. We give an explanation for why federally funded R&D has moved from an intramural activity to largely a grant process. Finally, we observe that much research is supported by a hybrid system of public and private sponsorship, and explain why this makes sense in some circumstances.
    Advances in the Study of Entrepreneurship, Innovation, and Economic Growth 09/2003;
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    Suzanne Scotchmer, Stephen M Maurer
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    ABSTRACT: Patents differ from other forms of intellectual property in that independent invention is not a defence to infringement. We argue that the patent rule is inferior in any industry where the cost of independently inventing a product is not too much less than (no less than half) the inventor's cost. First, the threat of entry by independent invention would induce patent holders to license the technology, lowering the market price. Second, a defence of independent invention would reduce the wasteful duplication of R&D effort that occurs in patent races. In either case, the threat of independent invention creates a mechanism that limits patent-holders' profits to levels commensurate with their costs of R&D. Copyright 2002 by The London School of Economics and Political Science
    Economica 02/2002; 69(276):535-47. · 1.15 Impact Factor
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    ABSTRACT: This paper builds a general equilibrium model of finite economies with exchange and club formation. Agents trade multiple private goods widely in the market, can belong to several clubs, and care about the characteristics of other club members. Because club memberships are indivisible and choices of club memberships must be coordinated across the population, the core of such an economy may be empty and equilibrium may not exist. However, for large finite club economies, an approximate core is not empty and states in this approximate core can be approximately decentralized by prices for private goods and for club memberships. The arguments use convexification tools familiar from the literature on private goods economies and a new tool, of some independent interest, that addresses the special problems created by the nature of club memberships. Journal of Economic Literature Classification Numbers: D2, D5, H4.
    Journal of Economic Theory 02/2001; · 1.24 Impact Factor
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    ABSTRACT: We present a theory of production that begins with an exogenously specified set of technologies, accessible to each potential firm. The technologies used in equilibrium are endogenous. Labor skills are differentiated, and the labor skills are acquired endogenously by workers, possibly by bearing private costs, and possibly by attending school. A technology can be used by a group of agents having the appropriate skills. We allow that workers care about the production plans in their firms, and will accept lower compensation to satisfy their preferences on production plans. In a continuum model, we show what price systems are required so that competitive equilibrium exists and core outcomes are equivalent to competitive outcomes.
    09/2000;
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    Eddie Dekel, Suzanne Scotchmer
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    ABSTRACT: Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.
    Journal of Economic Theory 07/1999; 87(1):125-143. · 1.24 Impact Factor
  • Stephen M. Maurer, Suzanne Scotchmer
    Science 05/1999; · 31.48 Impact Factor
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    ABSTRACT: This paper defines a general equilibrium model with exchange and club formation. Agents trade multiple private goods widely in the market, can belong to several clubs, and care about the characteristics of the other members of their clubs. The space of agents is a continuum, but clubs are finite. It is shown that (i) competitive equilibria exist, and (ii) the core coincides with the set of equilibrium states. The central subtlety is in modeling club memberships and expressing the notion that membership choices are consistent across the population.
    Econometrica 02/1999; 67(5):1185-1218. · 3.50 Impact Factor
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    ABSTRACT: This paper provides an extension of general equilibrium theory that incorporates the actions of individuals both as demanders and suppliers of goods and as members of firms, schools, social groups, and contractual relationships. The central notion of the paper is a group: a collection of individuals associated with one another for some purpose. The model takes as primitive an exogenous set of group types, interpretable as (potential) firms, schools, social groups, contracts etc. The types of schools and firms that materialize in equilibrium, as well as the way that agents acquire skills, are determined endogenously in a competitive market, as are the contracts they enter into, and the production and consumption of private commodities. The model is well-founded (equilibrium exists) and passes a basic test of perfect competition (coincidence of the core with the set of equilibrium states). Examples and Applications illustrate the flexibility and power of the framework.
    University of Copenhagen. Department of Economics, Discussion Papers. 01/1999;
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    Stephen M. Maurer, Suzanne Scotchmer
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    ABSTRACT: Patents di®er from other forms of intellectual property in that inde- pendent invention is not a defense to infringement. We argue that the patent rule is inferior in any industry where the cost of independently inventing a product is not too much less than (no less than half) the inventor's cost. First, the threat of entry by independent invention would induce patentholders to license the technology, lowering the market price. Second, a defense of independent invention would reduce the waste- ful duplication of R&D e®ort that occurs in patent races. In either case, the threat of independent invention creates a mechanism that limits patentholders' prots to levels commensurate with their costs of R&D.
    10/1998;
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    ABSTRACT: This paper defines a general equilibrium model with exchange and club formation. Agents trade multiple private goods widely in the market, can belong to several clubs, and care about the characteristics of the other members of their clubs. The space of agents is a continuum, but clubs are finite. It is shown that (i) competitive equilibria exist, and (ii) the core coincides with the set of equilibrium states. The central subtlety is in modeling club memberships and expressing the notion that membership choices are consistent across the population.
    03/1998;
  • Amihai Glazer, Suzanne Scotchmer, Esko Niskanen
    Journal of Public Economics. 02/1997; 65(1):3-7.
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    Eddie Dekel, Suzanne Scotchmer
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    ABSTRACT: We investigate whether replicator dynamics justify “survival of the fittest” when players inherit pure strategies, mixed strategies, or rules for choosing strategies. A strategy that never is a best reply can survive replicator dynamics if only pure strategies are heritable, but only rationalizable strategies survive if mixed strategies are heritable. Now suppose agents can inherit the rule of choosing a best reply to the last period's population, rather than inheriting a strategy itself. Such optimizers need not drive out players who inherit a dominated strategy. If we interpret replicator dynamics as a learning process, this means that non-optimizing behavior can survive.
    Journal of Economic Theory 08/1992; · 1.24 Impact Factor
  • Eddie Dekel, Suzanne Scotchmer
    American Economic Review 02/1990; 80(1):249-52. · 2.69 Impact Factor
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    Stephen M Maurer, Suzanne Scotchmer

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