Open source software and collective invention
Regulatory Push (possibly aligned with the interests of public policy students): Governments can motivate private research by declaring that certain products are unsafe or otherwise banned. The market for a product that meets the standard is then protected, which may create an incentive for inventors. A good topic would be to find historical incidences of this phenomenon, and to evaluate whether the resulting inventions might otherwise have been forthcoming. One place to look is environmental regulation (and talk to Margaret Taylor), and another is consumer product protection (investigate rulings of the FTC). Also look in the political science literature under "regulatory push." Figure out the advantages of spurring innovation by making regulations, rather than spurring innovations by funding research directly.
Patents and contract theory (possibly aligned with the interests of economics graduate students). As we will see in the course, one of the virtues of intellectual property is that it discourages waste. It encourages potential inventors to screen their ideas with respect to the potential value. Such screening mechanisms can be elaborated by refining the patent system. The ways to do this are connected to the economics literatures on mechanism design and contracting. A very educational task would be to read and summarize some of this literature, identifying possible extensions. Possible readings to get you started:
Cornelli, F., and M. Schankerman. 1999. "Patent Renewals and R&D Incentives.'' RAND Journal of Economics 30:197-213.
Kremer, M. 1998. "Patent Buyouts: A Mechanism for Encouraging Innovation.'' Quarterly Journal of Economics 113:1137-1167.
Llobet, G., H. Hopenhayn, and M. Mitchell. 2000. "Rewarding Sequential Innovators: Prizes, Patents and Buyouts.'' Staff Report 273. Minneapolis, MN: Federal Reserve Bank of Minneapolis. (possibly published)
Scotchmer, S. 1999. "On the Optimality of the Patent System.'' RAND Journal of Economics 30:181-196.
Shavell, S., and T. van Ypserele. 2001. "Rewards versus Intellectual Property Rights.'' Journal of Law and Economics 44:525-547.
Che, Y.-K., and I. Gale. Forthcoming. "Optimal Design of Research Contests.'' American Economic Review.
De Laat, E. A. 1996. ''Patents or Prizes: Monopolistic R&D and Asymmetric Information.'' International Journal of Industrial Organization 15:369-390.
Wright, B. 1983. "The Economics of Invention Incentives: Patents, Prizes and Research Contracts.'' American Economic Review 73:691-707
Licensing and Contract Theory (also suitable for economics graduate students): Licenses are contracts, and the parties face all the problems of asymmetric information that arise there. The book mostly abstracts away from these complexities, in order to understand the more fundamental role of licensing. However, if licensing is hard or impossible due to contracting problems, then many of the conclusions reported in the book must be reconsidered. Read the licensing literature with a view toward figuring out the severity of this problem. Here are some papers to get you started:
Spier, K. E., and M. C. Whinston. 1995 "On the Efficiency of Private Stipulated Damages for Breach of Contract: Entry Barriers, Reliance, and Renegotiation.'' RAND Journal of Economics 26:180-202.
Lerner, J., and J. Tirole. 2002. "Efficient Patent Pools.'' Working Paper 9175. Cambridge, MA: National Bureau of Economic Research.
Kamien, M. I. 1992. "Patent Licensing.'' In R. Aumann, and S. Hart, eds., Handbook of Game Theory, 331-354. Amsterdam: North-Holland/Elsevier Science.
Brocas, I. 2004. "Optimal Regulation of Cooperative R&D under Incomplete Information.'' Journal of Industrial Organization 52:81-120.
Gandal, N., and S. Scotchmer. 1993. "Coordinating Research through Research Joint Ventures.'' Journal of Public Economics 51:173-193.
Bhattacharya, S., C. d'Aspremont, and J.-L. Gerard-Varet. 2000. "Bargaining and Sharing Innovative Knowledge.'' Review of Economic Studies 67: 255-271.
Bhattacharya, S., J. Glazer, and D. E. M. Sappington. 1990. "Sharing Productive Knowledge in Internally Financed R&D Contests.'' Journal of Industrial Economics 39:187-208.
Economic Growth: Convergence, Divergence and Technology: Start by documenting the extent to which income disparities are growing or declining within regions (e.g., Europe, the U.S., Asia) and between regions (e.g., developed countries and less developed countries). Then figure out what has been said about the causes of these disparities. Is it resources? Is it technology? Is it war and pestilence? Is it lack of drugs for local diseases? Is it lack of educational infrastructure? Much of this literature is a formal economics literature (search working papers in the NBER website, www.nber.org, and other economics databases), but some is less formal (search political science databases).
Technical Protections for intellectual property (perhaps suitable for SIMS students, but find an angle you do not already know!) There is a technical question as to what is feasible and what has been tried, often under the label "digital rights management" (DRM). Document what is known, and discuss the potential for improvement. Then discuss the economic implications. The economic implications are far reaching. For one thing, the economics of DRM is more like the economics of trade secrecy than like the economics of intellectual property law. Another aspect is that, to the extent that DRM impedes copying, it counteracts some effects of copying that can actually be beneficial. Evaluate the literature on beneficial copying. You can get started with the following papers:
Bakos, Y., E. Brynjolfsson, and D. Lichtman. 1999. "Shared Information Goods.'' Journal of Law and Economics 42:117-155.
Bakos, Y., and E. Brynjolfsson. 1999. "Bundling Information Goods: Prices, Profits and Efficiency.'' Management Science 45:1613-1630.
Scotchmer, S. 2005. "Consumption Externalities, Rental Markets and Purchase Clubs.'' Economic Theory 25:235-253 .
Scotchmer, S., and Y. Park. 2004. "Technical Protection Measures and the Pricing of Digital Content.'' Mimeograph. Berkeley, CA: Department of Economics, UC Berkeley.
Varian, H. 2000. "Buying, Renting, Sharing Information Goods.'' Journal of Industrial Economics 48:473-488.
Johnson, W. R. 1985. "The Economics of Copying.'' Journal of Political Economy 93:158-174.
Novos, I., and M. Waldman. 1984. "The Effects of Increasing Copyright Protection: An Analytic Approach.'' Journal of Political Economy 92:236-246.
Conner, K. R. and R. P. Rumelt. 1991. "Software Piracy: An Analysis of Protecting Strategies.'' Management Science 37:125-139.
Chen, Y. and I. Png. 2003. "Information Goods, Pricing, and Copyright Enforcement: Welfare Analysis'' Information Systems Research 14:107-123.
Open source software and collective invention. Some observers view the open source software movement as another manifestation of "collective invention," a phenomenon that has been observed many times in the history of innovation. Describe this type of institution, and explain why it might pay private inventors to share their inventions with potential competitors. Evaluate a few of the historical examples (can you find others besides those in the references below), looking for differences in functioning as well as commonalities. How do they evolve over time? Do you think open source will evolve in a similar way? Here are some references to get you going:
Allen, Robert C. 1983. “Collective Invention,” Journal of Economic Behavior and Organization 4 (1): 1-24.
Foray, Dominique and Liliane Hilaire-Perez. 2001. “The Economics of Open Technology: Collective Organization and Individual Claims in the “Fabrique Lyonnaise” During the Old Regime,” C. Antonelli, D. Foray, B. H. Hall and W. E. Steinmueller, Essays in Honor of Paul A. David. Forthcoming.
Gambardella, A., and B. H. Hall, 2004, "Proprietary versus Public Domain Licensing of Software Products," Scuola Sant’anna Superiore Pisa and University of California at Berkeley. Available at http://emlab.berkeley.edu/users/bhhall/papers/GambHall04_RP.pdf
Hall, B. H., 2004, "On copyright and patent protection for software and databases: a tale of two worlds," in O. Granstrand (Editor), Economics, Law, and Intellectual Property, (Boston/Dordrecht: Kluwer Academic Publishers). Available at http://emlab.berkeley.edu/users/bhhall/papers/BHH OGvol02.pdf
Harhoff, D., J. Henkel, and E. von Hippel, 2003, "Profiting from voluntary information spillovers: How users benefit by freely revealing their innovations," Research Policy.
Lerner, J. and J. Tirole, 2002, "Some simple economics of open source," Journal of Industrial Economics L, 197-234.
Nuvolari, Alessandro. 2001. “Collective Invention during the British Industrial Revolution: The Case of the Cornish Pumping Engine,” Copenhagen Business School: DRUID Working Paper No. 01-05.
Von Hippel, E, and G. von Krogh, 2003, "Open source software and the private-collective innovation model: issues for organization science," Organization Science.