PATENT BREADTH IN AN INTERNATIONAL SETTING

We examine the Nash equilibria of a game where two national governments set patent breadth strategically. Broader patents make R&D more attractive, but the effect on static efficiency is nonmonotonic. In a North–South model, where only the North can innovate, harmonization of patent breadth lowers welfare relative to the Nash equilibrium. When both countries can innovate, harmonization toward narrower patent breadth may raise world welfare. (JEL F02, F13, O3, O31, O32)     

STRATEGIC ENFORCEMENT,INTELLECTUAL PROPERTY RIGHTS,AND CONTRACTUAL R&D

This study examines the role of intellectual property rights (IPRs) in contractual research and development (R&D) in developing countries. We find that strong IPRs provide incentives for firms, both multinational and local, to specialize in R&D activities in which they have competitive advantage (the specialization effect). They also facilitate the switching process from imitators to potential innovators for local firms (the switching effect). Moreover, we also demonstrate that a multinational firm's strategic IPRs enforcement behavior can be an effective instrument for subsidizing contractual R&D in developing countries (the subsidizing effect). We further illustrate how a policy mix of IPRs and a foreign direct investment subsidy in these countries affects R&D activities by adding an offshore R&D subsidiary as an additional organizational form. (JEL L13, O31, O34)     

上海市专利申请资助政策的效应分析

利用相关数据系统分析上海市专利资助政策对专利申请数量和专利质量的影响。研究表明,上海市的专利资助政策对发明专利和外观设计专利申请数量具有明显的提升作用,对实用新型专利申请量的提升作用相对较小;对各种专利的质量都存在着一定的消极影响,尤其是外观设计专利的质量影响最大。     

SPECULATIVE PROFITS,INNOVATION, AND GROWTH

When technological change affects the prices of tradeable assets, innovators can obtain speculative profits by exploiting their inside information as to the occurrence of innovations. We propose a tractable model of endogenous growth that formalizes this argument, originally due to Hirshleifer (1971). We then use the model to assess two claims advanced by Hirshleifer, namely, that speculative profits can generate excessive investment in R&D when they add to monopoly rents guaranteed by patent protection, or else even in a perfectly competitive economy. The analysis confirms the first claim, but casts doubts on the second one. (JEL O30, O40)     

CORRUPTION,TAX EVASION AND THE ROLE OF WAGE INCENTIVES WITH ENDOGENOUS MONITORING TECHNOLOGY

The importance of high salaries to circumvent bureaucratic corruption has been widely recognized in the policy debate. Yet, there appears to be much reluctance when it comes to the implementation. In this paper, we argue that deterring corruption through wage incentives may become prohibitively expensive that the government finds it optimal to accept higher net revenues at the expense of honesty. Deviating from the existing literature, we set an endogenous monitoring technology that allows us to capture the dual role of auditing, as a complement with and as a substitute for wage incentives to deter bribery. We find that the government is better‐off either completely eliminating corruption or accepting corruption by offering wages lower than the market wage. Offering public wage premium that does not deter bribery is suboptimal. When it is optimal to deter bribery, the government can do it either through wage incentives or monitoring. The role of wage incentives decreases in societies with higher level of dishonesty. (JEL D73, H26, J33, J41)     

Changing Meanings, Changing Institutions: An Institutional Analysis of Patent Legislation

Conceptions of patents have changed significantly over the past two centuries, reflecting broad changes in state structures and the international system. In the late eighteenth century, the creation of democratic states such as the United States and France encouraged the conceptualization of patents as an economic and political right belonging to an individual, rather than to a corporate body such as a guild. A second conception of patents arose in the nineteenth century in which patents become a state-based mechanism for motivating economic growth. In the late twentieth century, patents have become conceptualized as an essential part of the economic infrastructure of a state, for both industrialized and less developed countries. This conceptualization has allowed international development organizations to become central in the diffusion of patent legislation to less developed countries. These changes in conceptions about patents did not always occur smoothly, however. Major controversies over the role and usefulness of patents occurred in each century, implying that the diffusion of patent legislation was by no means inevitable. This paper illustrates these arguments with a historical discussion of patents and a statistical analysis that models the adoption of patent legislation for all countries from 1790–1984.     

STRATEGIC INFORMATION DISCLOSURE: THE CASE OF MULTIATTRIBUTE PRODUCTS WITH HETEROGENEOUS CONSUMERS

We examine the incentives for firms to voluntarily disclose otherwise private information about the quality attributes of their products. In particular, we focus on the case of differentiated products with multiple attributes and heterogeneous consumers. We show that there exist certain configurations of consumers' multidimensional preferences under which a firm, no matter whether producing a high‐ or low‐quality product, may choose not to reveal the quality even with zero disclosure costs. The failure of information unraveling arises when providing consumers with more information results in more elastic demand, which triggers more intensive price competition and leads to lower prices and profits for competing firms. As a result, the equilibrium in which disclosure is voluntary may diverge from that in which disclosure is mandatory. (JEL L15, L5)     

MEASURING EFFORT INCENTIVES IN A TOURNAMENT WITH MANY PARTICIPANTS: THEORY AND APPLICATION

This article provides an empirical measure to compare incentive effects of different tournament structures. Although there have been many theoretical attempts to analyze incentive effects of a tournament competition, empirical applications are limited as the provided conditions cannot easily be empirically observed. We show that the empirical density of the performance distribution can be used to measure effort incentives in a tournament with many participants. We apply this method to evaluate the grading policy change in the 2008 College Scholastic Ability Test in South Korea. (JEL C70, C51)     

MARCH MADNESS? UNDERREACTION TO HOT AND COLD HANDS IN NCAA BASKETBALL

The hot hand bias is the widely documented bias toward overestimation of positive serial correlation in sequential events. We test for the hot hand bias in a novel real‐world context, the seeding of National Collegiate Athletic Association (NCAA) basketball tournament teams. That is, we examine whether teams that perform relatively well heading into “March Madness” are seeded too high, and/or teams with poor recent performance are seeded too low. The seeds are determined by a 10‐member committee that only has implicit incentives, but these incentives are still substantial as the committee's decisions are highly scrutinized by the media, fans, and other stakeholders. We find that, contra the hot hand bias, the committee underreacts to signals of momentum heading into the NCAA tournament. Various results indicate this behavior can be attributed to both: (1) inattention to relatively detailed information indicating momentum; and (2) under‐appreciation of the predictive value of this information. Betting markets incorporate this information efficiently, but neglect some additional information that is predictive of winning NCAA tournament games but not of beating the spread. We note that the NCAA tournament has been highly popular and lucrative partly due to the “madness” (high frequency of wins by lower‐seeded teams), which the bias we document contributes to, making the persistence of bias less surprising. (JEL D83, L83)     

INTERRACIAL WORKPLACE COOPERATION: EVIDENCE FROM THE NBA

Using data from the National Basketball Association (NBA), we examine whether patterns of workplace cooperation occur disproportionately among workers of the same race. We find that, holding constant the composition of teammates on the floor, basketball players are no more likely to complete an assist to a player of the same race than a player of a different race. Our confidence interval allows us to reject even small amounts of same‐race bias in passing patterns. We find some evidence of own‐race bias in situations where the outcome of a particular play is less important. Our findings suggest that high levels of interracial cooperation can occur in a setting where workers are operating in a highly visible setting with strong incentives to behave efficiently. (JEL J15, J71, L23)     

JAPAN'S SHIFT FROM PROCESS TO PRODUCT PATENTS IN THE PHARMACEUTICAL INDUSTRY AN EVENT STUDY OF THE IMPACT ON JAPANESE FIRMS

In 1975 Japan expanded the scope of its patent law by introducing product patents for newly developed chemical and pharmaceutical products. We use rate-of-return data from the Tokyo Stock Exchange for Japanese pharmaceutical companies to examine the impact of the change in the patent law. Our empirical findings indicate that the passage of the new patent law induced an excess return of approximately 26 percent to a portfolio of large pharmaceutical companies. Companies with R&D programs specializing in new product development experienced large gains, while companies with R&D programs specializing in imitative process patents experienced no gains.     

Organizational Crime: Two Models of Criminogenesis*

Sociological interest in the “criminogenic” features of organizational structure has tended to focus on crime-coercive corporate systems that compel their members to commit illegal acts as the price of successful system membership. Our purpose is to alert researchers to another variety of organizational criminogenesis, not equally likely to be noticed and studied: the crime-facilitative system. In this second model of criminogenesis, system members are not forced to break the law, but rather are presented with extremely tempting structural conditions—high incentives and opportunities coupled with low risks—that encourage and facilitate crime, both by system members and by outsiders who seek to enter or use the system for criminal purposes. Using the securities industry as an illustration, we review some elements we feel may be characteristic of crime-facilitative systems, and suggest some directions for further investigation. To yield a coherent and testable theory of organizational crime, research in this area now needs to move beyond simple identification of corporate criminogenesis, and on to specification of the conditions under which various types of criminogenesis are likely to occur.     

AN ECONOMIC ANALYSIS OF IDENTITY AND CAREER CHOICE*

Standard economic models tend to be more specific about pecuniary payoffs than nonpecuniary payoffs to education. Based on the ideas of Akerlof and Kranton, we consider a model of career choice and identity where individuals derive nonpecuniary identity payoffs. Using factor analysis on a range of attitude questions, we find two factors related to identity (career orientation and social orientation), which are important for planned educational choices and for observed gender differences. The implication is that policy makers and institutions of higher education need to focus on identity‐related issues rather than just improved financial incentives if they aim at attracting high‐ability youths to certain careers. (JEL I21, J24)     

Incentives to cooperate and the discretionary power of courts in divorce law

In this paper, we study how the uncertainty in the behavior of judges provides parents going to separate with incentives to cooperate. We introduce a model of cooperative bargaining to describe the behavior of parents whose preferences satisfy the characterization of risk averse/pessimistic types proposed by Yaari (1987, Econometrica, 55, 95–116) in his Dual Decision Theory under Risk. The behavior of the judge is modeled in a simple manner: he is either supposed to follow a strict rule (we will say that he uses an imperative scale of alimony), or he may use discretion (he uses an indicative scale of alimony). The point is that for both parents the judgment represents an external opportunity to divorce—the disagreement point in negotiation. We show that the effective decision of parents (cooperation versus trial) depends on the specific structure of the costs and risks associated with divorce procedures, such that more uncertainty at trial increases the incentives to cooperate for risk averse parents. Finally, we give a characterization of the optimal degree of the judges’ discretionary power required to maximize the parents’ gains from negotiation.

Migration Decisions Within Dual‐Earner Partnerships: A Test of Bargaining Theory

This article focuses on the problems faced by dual‐earner partnerships arising from the regional coordination of the partners' careers. It is still unknown whether the fact that couples are less mobile than singles is caused by homogeneous preferences within couples or by a process of balancing conflicting interests. Consequently, we analyze the potential conflicts provoked by work‐related migration incentives. We test hypotheses derived from bargaining theory using quasi‐experimental data from a factorial survey of nearly 280 European couples. Our results support the bargaining approach and confirm that asymmetrical shifts in bargaining power drive the potential for conflict. Women's willingness to move is generally less than men's, but the impact of employment prospects differs only slightly by gender.     

CRITICAL ISSUES IN THE PRACTICE OF MARKET DESIGN

The years since 1994 have witnessed the emergence of market design as a new discipline within economics, in which research and practice exert powerful mutual influences in matching and auction markets. The problem of designing well‐functioning auction markets has led economic designers to revisit such fundamental issues as the definitions of commodities, the ways participants communicate with markets, the trade‐offs between the incentives provided for truthful reporting and other attributes of mechanism performance, and the determinants of the scope of markets, especially whether and how trade in different goods is linked. (JEL D44, C78)     

ECONOMIC STRUCTURE AND SEIGNIORAGE: A DYNAMIC PANEL DATA ANALYSIS

Controlling for a more comprehensive set of economic structure variables and using system generalized method of moment (GMM) dynamic panel estimation, we consider the determinants of seigniorage. While we confirm some results found in previous literature, including an inverse relationship of financial development and exchange rate management to seigniorage, we find little evidence that political instability and polarization lead to greater reliance on seigniorage. We also find robust evidence that the size of the shadow economy and natural resource rents are directly related to seigniorage, the latter result likely a result of exchange rate management. Thus, an effective strategy to reduce reliance on seigniorage is to lower the incentives to operate in the shadow economy, while exchange rate management may be counter‐productive in countries with considerable natural resource rents. (JEL E5, O50)     

When a Rose Is Just a Rose: The Illusion of Taxonomies in Infant Categorization

The terms basic, superordinate, subordinate, and global are often used to describe the categories formed by infants. However, although infants' categories appear externally to match those formed by adults, it is not clear that they are grounded in an organized hierarchical system that embodies relations within and between domains; that is, a taxonomy. To assess whether it is appropriate to consider infants' categories as taxonomies, 3 criteria are examined: (a) similarity to adults' choice of category members, (b) hierarchical understanding, and (c) agreement with adults' bases for classification. It is argued that infants' categories do not meet these criteria and that it may be erroneous to apply the same labels to categories formed in the first 2 years as those in later life. To do so may be to hold an illusion of taxonomies about infants' categories.     

The Effects of Modeling and Experience on Young Children's Persistence at a Gambling Game

Gambling is common among children and adolescents, but Hide is known about factors initiating or maintaining this behavior. Fifty-one male and 51 female kindergarten and first grade children were invited to play a game involving repeated opportunities to select colored chips from a cup while blindfolded. Children playing for tangible incentives elected to play longer than those who were not (p < .001). Seeing a videotaped model win or fail to win a large prize had no effect on persistence with the game. Playing again one week later, children playing for incentives exhibited a more successful strategy, quitting sooner (p < .04) and with more winnings (p < .03). The parameters of experiential versus observational learning are discussed, with implications for educating children about risk-taking.