James Bessen

James Bessen
Boston University | BU · School of Law

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96
Publications
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4,143
Citations

Publications

Publications (96)
Article
Artificial intelligence (AI)-enabled products are expected to drive economic growth. Training data are important for firms developing AI-enabled products; without training data, firms cannot develop or refine their algorithms. This is particularly the case for AI startups developing new algorithms and products. However, there is no consensus in the...
Article
Studying firm-level adjustments is important for understanding the economic effects of workplace automation. So far, emerging firm-level evidence is focused on robotics and the manufacturing sector. In this paper, we document that the adoption of automation technologies extends beyond manufacturing firms. We identify firm-level automation events an...
Chapter
Automation tends to be partial rather than complete, automating tasks rather than entire professions. Partial automation can also cause increases in employment in the affected industries, as well as decreases. Nevertheless, it will still cause disruption in the near term, since it requires people to learn new skills in order to remain employed. In...
Article
Will new technologies cause industries to shed jobs, requiring novel policies to address mass unemployment? Sometimes productivity-enhancing technology increases industry employment instead. In manufacturing, jobs grew along with productivity for a century or more; only later did productivity gains bring declining employment. What changed? The elas...
Article
Full-text available
Rapid advances in artificial intelligence (AI) and automation technologies have the potential to significantly disrupt labor markets. While AI and automation can augment the productivity of some workers, they can replace the work done by others and will likely transform almost all occupations at least to some degree. Rising automation is happening...
Article
The diffusion of innovations is supposed to dissipate inventors' rents. Yet in many documented cases, inventors freely shared knowledge with their competitors. Using a model and case studies, this article explores why sharing did not eliminate inventors' incentives. Each new technology coexisted with an alternative for one or more decades. This all...
Article
We use detailed data to estimate the private costs and private rents of United States patents for publicly-traded firms. In analyzing costs, we first introduce a novel theoretical model to interpret our estimates. We then combine lawsuit data from Derwent Litalert with non-practicing entity (NPE) lawsuits collected by Patent Freedom, and use an eve...
Article
Full-text available
28 U.S.C. § 1400(b) provides that a defendant in a patent case may be sued where the defendant is incorporated or has a regular and established place of business and has infringed the patent. This Court made clear in Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 223 (1957), that those were the only permissible venues for a patent case....
Article
Since 1980, US corporate valuations have risen relative to assets and operating margins have grown. The possibility of sustained economic rents has raised concerns about economic dynamism and inequality. But rising profits could come from political rents or, instead, from returns to investments in intangibles. Using new data on Federal regulation a...
Chapter
Private innovation appears to have played a major if not dominant role in the growth of output per capita since the Industrial Revolution. Yet economic theory indicates that the level of investment in private innovation will generally be less than is socially optimal unless public policies such as patents encourage additional investment. Therefore,...
Book
Today’s great paradox is that we feel the impact of technology everywhere—in our cars, our phones, the supermarket, the doctor’s office—but not in our paychecks. In the past, technological advancements dramatically increased wages, but for three decades now, the median wage has remained stagnant. Machines have taken over much of the work of humans,...
Article
Industry and Revolution: Social and Economic Change in the Orizaba Valley, Mexico. By Gómez-GalvarriatoAurora. Cambridge, MA: Harvard University Press. 2013. Pp. 351. $49.95, hardcover. - Volume 74 Issue 2 - James Bessen
Article
The diffusion of innovations is supposed to dissipate inventors’ rents. Yet in many documented cases, inventors freely shared knowledge with rivals, including in steam engines, iron and steel production and textile machinery. Using a model and case studies, this paper explores why sharing did not eliminate inventors’ incentives. Each new technology...
Article
The Federal Circuit’s expansion of patentable subject matter in the 1990s led to a threefold increase in software patents, many of which contain abstract ideas merely tethered to a general-purpose computer. There is little evidence, however, to suggest this expansion has produced an increase in software innovation. The software industry was highly...
Article
International comparisons of patent systems are essential to harmonization treaties and to analyze economic growth. Yet these comparisons often rely on little but conventional wisdom. This paper develops an empirical method to compare the economic strength and quality of patent systems by using renewal analysis of matched patents in different count...
Article
In patent theory, the cost of communicating technical knowledge is small. In human capital theory, it is large. But evidence suggests that these costs are actually endogenous. Firms invest in reducing communication costs, but only when technology is sufficiently advanced. This can make competition different for early stage technologies: patents do...
Article
We use a detailed data set to estimate the private costs and private benefits of United States patents owned by publicly-held firms. To estimate these costs, we combine data from Derwent Litalert with a proprietary dataset of non-practicing entity (NPE) lawsuits collected by Patent Freedom, and use an event-study approach to estimate losses suffere...
Article
We use a detailed data set to estimate the private costs and private benefits of United States patents owned by publicly-held firms. To estimate these costs, we combine data from Derwent Litalert with a proprietary dataset of non-practicing entity (NPE) lawsuits collected by Patent Freedom, and use an event-study approach to estimate losses suffere...
Article
In the past, “non-practicing entities” (NPEs), popularly known as “patent trolls,” have helped small inventors profit from their inventions. Is this true today or, given the unprecedented levels of NPE litigation, do NPEs reduce innovation incentives? Using a survey of defendants and a database of litigation, this paper estimates the direct costs t...
Article
How much of the rapid growth in output per man-hour in nineteenth-century cotton weaving arose from technical change and how much arose from price-driven substitution of capital for labor? Using an engineering production function, I find that factor price changes account for little of the growth in output per man-hour. However, much of the growth a...
Article
This chapter documents instances from past centuries where inventors freely shared knowledge of their innovations with other inventors. It is widely believed that such knowledge sharing is a recent development, as in Open Source Software. Our survey shows, instead, that innovators have long practiced “collective invention” at times, including inven...
Article
In the past, non-practicing entities (NPEs) - firms that license patents without producing goods - have facilitated technology markets and increased rents for small inventors. Is this also true for today’s NPEs? Or are they “patent trolls” who opportunistically litigate over software patents with unpredictable boundaries? Using stock market event s...
Article
This report examines changes in the patenting behavior of the software industry since the 1990s. It finds that most software firms still do not patent, most software patents are obtained by a few large firms in the software industry or in other industries, and the risk of litigation from software patents continues to increase dramatically. Given th...
Article
Did nineteenth century technology reduce demand for skilled workers in contrast to modern technology? I obtain direct evidence on human capital investments and the returns to skill by using micro-data on individual weavers and an engineering production function. Weavers learned substantially on the job. While mechanization eliminated some tasks and...
Article
Innovative ideas have unique properties arising from low communication costs. But ideas come from knowledge that is costly to communicate. “Formalizing” knowledge — codifying, developing standards, etc. — reduces these costs. In a simple model, formalization is associated with changes in the nature of competition between two equilibrium regimes. In...
Article
The value of patent rents is an important quantity for policy analysis. However, estimates in the literature based on patent renewals might be understated. Market value regressions could provide validation, but they have not had clear theoretical foundations for estimating patent rents. I develop a simple model to make upper-bound estimates of pate...
Article
In theory, property rights allow markets to achieve Pareto optimal allocations. But the literature on contracting largely ignores what happens when property rights are imperfectly defined and enforced. Although some models include weak enforcement or poorly defined rights or "anticommons," this paper develops a general model that includes all of th...
Article
How much of the rapid growth in labor productivity in nineteenth century cotton weaving arose from capital-labor substitution and how much from technical change? Using an engineering production function and detailed information on inventions, I find that factor substitution accounts for little growth. However, much of the growth and most of the app...
Article
Full-text available
Do patents behave substantially like property rights in tangible assets, in that they encourage development and innovation? This article notes that historical evidence, cross-country evidence, economic experiments, and estimates of net benefits all indicate that general property rights institutions have a substantial direct effect on economic growt...
Article
How should the economic performance of property systems be evaluated? Benefit-cost analysis is widely used to evaluate non-market based regulation when prices are not available. Market prices provide better information for property systems, but market prices are not necessarily socially optimal when property rights are imperfect. This paper discuss...
Article
Do patents provide critical incentives to encourage investment in innovation? Or, instead, do patents impose legal risks and burdens on innovators that discourage innovation, as some critics now claim? This paper reviews empirical economic evidence on how well patents perform as a property system.
Article
Solow (1957) decomposed labor productivity growth into two components that are independent under Hicks neutrality: input growth and the residual, representing technical change. However, when technical change is Hicks biased, input growth is no longer independent of technical change, leading to ambiguous interpretation. Using Solow’s model, I decomp...
Article
Using an engineering production function and detailed information on major inventions in nineteenth century cotton weaving, this paper explores how much of the rapid growth in labor productivity arose from capital-labor substitution and how much from technical change. I find that labor-saving technical change accounts for almost all of the growth....
Article
Full-text available
In the last several years, business leaders, policymakers, and inventors have complained to the media and to Congress that today’s patent system stifles innovation instead of fostering it. But like the infamous patent on the peanut butter and jelly sandwich, much of the cited evidence about the patent system is pure anecdote--making realistic polic...
Article
"Software patents have grown rapidly in number and now comprise 15% of all patents. They are acquired primarily by large manufacturing firms in industries known for strategic patenting; only 5% belong to software publishers. The very large increase in software patent propensity over time is not adequately explained by changes in R&D investments, em...
Article
This paper estimates the total cost of patent litigation to alleged infringers. We use a large sample of stock market event studies around the date of lawsuit filings for US public firms from 1984-99. We find that the total costs of litigation are much greater than legal fees and costs are large even for lawsuits that settle. Lawsuits cost alleged...
Article
The value of patent rents is an important quantity for policy analysis. However, estimates in the literature based on patent renewals might be understated. Market value regressions could provide validation, but they have not had clear theoretical foundations for estimating patent rents. I develop a simple model to make upper-bound estimates of pate...
Chapter
Open source software, developed by volunteers, appears counter to the conventional wisdom that without ownership rights or government intervention, public goods will not be efficiently provided. But complexity makes a difference: contracts are incomplete and ownership rights do not necessarily elicit socially optimal effort. There are three mechani...
Article
Full-text available
This paper uses renewal data to estimate the value of U.S. patents, controlling for patent and owner characteristics. Estimates of U.S. patent value are substantially larger than estimates for European patents, however, the ratio of U.S. patent value to R&D for firms is only about 3%. Contrary to a common assertion, patents issued to small patentee...
Article
Full-text available
A vast and often confusing economics literature relates competition to investment in innovation. Following Joseph Schumpeter, one view is that monopoly and large scale promote investment in research and development by allowing a firm to capture a larger fraction of its benefits and by providing a more stable platform for a firm to invest in R&D. Ot...
Article
“Do Patents Facilitate Financing in the Software Industry?” by Ronald J. Mann contributes empirical evidence to our understanding of how software startups use patents. However, a close examination of the actual empirical findings in this paper points to rather different conclusions than those that Mann draws, namely: few software startups benefits...
Article
A simple formal model shows that estimates of an upper bound on the value of firms' patent rents can be obtained from regressions on Tobin's Q. I test this model on a sample of US firms and find it is robust to a variety of considerations. The estimates correspond well with implied estimates derived from previous research. Also, these upper bound e...
Article
En la UE se ha estimado que los costes de la congesti�n representan el 2% de su PIB y que el coste de la poluci�n del aire y ruido supera el 0,6% del PIB, siendo alrededor del 90% de los mismos ocasionados por el transporte terrestre. Ante este hecho y el continuo aumento de la demanda del transporte privado frente al p�blico para los desplazamient...
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This Article reviews empirical patent litigation research to reveal patent policy lessons. First, the Article presents facts about patent litigation. Next, it analyzes the patent premium. Patent litigation research reveals little about the magnitude of the patent premium, but the research reveals the strategies firms use to capture the patent premi...
Article
Open source software, developed by volunteers, appears counter to the conventional wisdom that private provision of public goods is socially more efficient. But complexity makes a difference. Under standard models, development contracts for specialized software may be difficult to write and ownership rights do not necessarily elicit socially optima...
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Full-text available
Does the disclosure requirement of the patent system encourage the diffusion of inventions? This paper builds a simple model where firms choose between patents and trade secrecy to protect inventions. Diffusion is not necessarily more likely with a patent system nor is the “market for technology” necessarily greater.
Article
Australian and New Zealand environmental economists have played a significant role in the development of concepts and their application across three fields within their subdiscipline: non-market valuation, institutional economics and bioeconomic modelling. These contributions have been spurred on by debates within and outside the discipline. Much o...
Article
This paper contributes with empirical findings to European co-inventorship location and geographical coincidence of co-patenting networks. Based on EPO co-patenting information for the reference period 2000-2004, we analyze the spatial con figuration of 44 technology-specific co-inventorship networks. European co-inventorship (co-patenting) activit...
Article
Patent race models assume that an innovator wins the only patent covering a product. But when technologies are complex, this property right is defective: ownership of a product’s technology is shared, not exclusive. In that case I show that if patent standards are low, firms build “thickets” of patents, especially incumbent firms in mature industri...
Article
Full-text available
Over the past two decades, the scope of technologies that can be patented has been expanded to include many items previously thought unsuitable for patenting, for example, computer software. Today, the U.S. Patent and Trademark Office grants 20,000 or more software patents a year. Conventional wisdom holds that extending patent protection to comput...
Article
In 1842 Lowell textile firms increased weaving productivity by assigning three looms per worker instead of two. This marked a turning point. Before, weavers at Lowell were temporary and mostly literate Yankee farm girls; afterwards, firms increasingly hired local residents, including illiterate and Irish workers. An important factor was on-the-job...
Article
Diego Comin (2002, Review of Economic Dynamics 5 (2)), critiques my paper "Technology adoption costs and productivity growth: The transition to information technology" (2002, Review of Economic Dynamics 5 (2)), concluding that all of my major results are unfounded. I contend, to the contrary, that my results hold up against his criticism. My paper...
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Full-text available
Using two panels of U.S. manufacturing industries, this paper estimates capital adjustment costs from 1961 to 1996. I find that from 1974-83 adjustment costs rose sharply --they more that doubled from about 3% of output to around 7%. Moreover, this increase is specifically associated with a shift to investment in information technology. But such la...
Article
When innovation is cumulative, early patentees hold claims against later innovators. Then potential hold-up may cause prospective second stage innovators to forego investing in R&D. It is sometimes argued that ex ante licensing (before R&D) avoids hold-up. This paper explores ex ante licensing when information about development cost is private. In...
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Full-text available
Were ordinary factory workers unskilled and was technology "de-skilling" during the Industrial Revolution? I measure foregone output to estimate the human capital investments in mule spinners and power loom tenders in ante-bellum Lowell. These investments rivaled those of craft apprentices, suggesting a different view of industrial technology. Acco...
Article
How could such industries as software, semiconductors, and computers have been so innovative despite historically weak patent protection? We argue that if innovation is both sequential and complementary---as it certainly has been in those industries---competition can increase firms' future profits thus offsetting short-term dissipation of rents. A...
Article
A large sample of new plants is studied to reveal detailed adjustment behavior for capital, labor and productivity. Once production has begun, capital adjusts almost as quickly as labor. Overall, capital adjustment is lumpy while labor follows a learning-by-doing model rather than a convex adjustment cost model. Plants are quite heterogeneous, howe...
Article
The role of historical accident in technology selection has been difficult to measure. This paper develops a quantifiable model for a basic and widely applicable form of path dependence: the random walk. This real options model is applied to the transition in British cotton spinning at the beginning of the century. In contrast to neoclassical model...
Article
Why is it that adopting new technologies takes so long and costs so much? Clearly, firms do not know all the details necessary to implement a complex technology efficiently; learning these details requires extensive search. However, this explanation has a problem: even limited search may be so costly that newly discovered techniques will not be tri...
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Full-text available
Version: 12/99 New technologies typically improve over time. Firms adopting new technologies expect future vintages to be superior, and, with free entry, to bring lower prices. Hence firms may value the option to wait before making irreversible investment. Traditional means of accounting for obsolescence do not fully capture these considerations. T...
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Full-text available
Zusammenfassung: Warum können solche Industriezweige wie die Software-, Halbleiter-und Computerbranche so innovativ sein trotz — historisch gesehen — schwachem Patentschutz? Wir stellen die These auf, dass Wettbewerb zukünftige Unternehmensgewinne steigern und somit kurzfristig entgangene Gewinne ausgleichen kann, wenn Innovationen sowohl sequentie...
Article
Economists often assume that the cost of communicating technical knowledge is exogenous, sometimes small (patent theory) and sometimes large (human capital and technology diffusion). In this paper, inventors/entrepreneurs can choose to reduce marginal communication costs by investing in "formalizing" knowledge. Technical productivity affects this d...

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