<incom> Eric Maskin - new economics Nobel laureate's work on open IP

[Soenke Zehle]

From: Darius Cuplinskas <darius.sarasai at gmail.com>
Subject: Eric Maskin - new economics Nobel laureate's work on open IP
Date: Wed, 31 Oct 2007 16:27:23 +0000

One of the three winners of the Nobel Prize in economics two weeks ago
was Eric Maskin.  As you may know, he has done some important work on
the benefits of weak intellectual property protection on the internet
generally, and for software innovation specifically.  Here are links
and abstracts for two of his papers.

Intellectual Property on the Internet: What's Wrong with Conventional 
Wisdom?
by James Bessen and Eric Maskin
Revised 2004
www.researchoninnovation.org/iippap2.pdf

The growth of the Internet has put pressure on traditional
intellectual property protections such as copyright and patent. Some
forms of information, when made accessible on the Internet, are easily
copied. Because the costs of copying are low and because copying is
often anonymous, publishers have often responded with more aggressive
enforcement of existing intellectual property rights. This effort can
actually be seen as part of a twenty-year trend toward tighter
intellectual property enforcement and extensions of intellectual
property rights. Yet this response and this trend toward tighter
intellectual property rights are not always appropriate, especially on
the Internet. This paper argues that the Internet and World Wide Web
possess characteristics that may make such policy inappropriate—the
Web is a "community" that is highlyinteractive and dynamic. This paper
summarizes a formal economic model applied to such an interactive and
dynamic environment. The model suggests that both individual
publishers and society more generally may benefit from weak
intellectual property enforcement and protection in such an
environment.

Sequential Innovation, Patents, and Imitation
James Bessen and Eric Maskin
Rand Journal of Economics (forthcoming).
September 2002 / Updated Paper, March 2006
http://www.sss.ias.edu/publications/papers/econpaper25.pdf

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
simple model also shows that in such a dynamic industry, patent
protection may reduce overall innovation and social welfare. The
natural experiment that occurred when patent protection was extended
to software in the 1980's provides a test of this model. Standard
arguments would predict that R&D intensity and productivity should
have increased among patenting firms. Consistent with our model,
however, these increases did not occur. Other evidencesupporting our
model includes a distinctive pattern of cross-licensing in these
industries and a positive relationship between rates of innovation and
firm entry.

See also Philippe Aigrain's comment on Maskin's work:
http://paigrain.debatpublic.net/?p=105

the FFII reaction:
http://press.ffii.org/Press_releases/Economist_Critic_of_Software_Patents_gets_Nobel_Prize