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Tirole, Jean
and Weyl, Glen
(2012)
Market Power Screens Willingness-to-Pay.
The Quarterly Journal of Economics, vol. 127 (n° 4).
pp. 1971-2003.
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Abstract
What is the best way to reward innovation? While prizes avoid deadweight loss, intellectual property selects high social surplus projects. Optimal innovation policy thus trades off the ex-ante screening benefit and the ex-post distortion. It solves a multidimensional screening problem in the private information held by the innovator: research cost, quality and market size of the innovation. The appropriate degree of market power is never full monopoly pricing and is determined by measurable market characteristics, the inequality and elasticity of innovation supply, making the analysis open to empirical calibration. The framework has applications beyond IP policy to the optimal pricing of platforms or the optimal procurement of public infrastructure.
| Item Type: | Article |
|---|---|
| Language: | English |
| Date: | October 2012 |
| Refereed: | Yes |
| Uncontrolled Keywords: | Intellectual property, market power, screening, stretch parametrization |
| JEL Classification: | D40 - General D61 - Allocative Efficiency; Cost-Benefit Analysis D82 - Asymmetric and Private Information L10 - General L40 - General |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 18 Jan 2012 05:45 |
| Last Modified: | 02 Apr 2021 15:33 |
| OAI Identifier: | oai:tse-fr.eu:24720 |
| URI: | https://publications.ut-capitole.fr/id/eprint/951 |
