Who is afraid of pirates? An experiment on the deterrence of innovation by imitation

Arbeitspapier

In the policy debate, intellectual property is often justified by what seems to be a straightforward argument: if innovators are not protected against others appropriating their ideas, incentives for innovation are suboptimally low. Now in most industries for most potential users, appropriating a foreign innovation is itself an investment decision fraught with cost and risk. Nonetheless standard theory predicts too little innovation. Arguably the problem is exacerbated by innovators' risk aversion as well as their aversion against others benefitting from their efforts without contributing to the cost, and without bearing innovation risk. We model the situation as a game and test it in the lab. We find even more appropriation than predicted by standard theory. But the risk and the experience of appropriation does not deter innovation. We find even more innovation than predicted by theory, and actually more than would be efficient. In the lab, the prospect of givingimitators a free lunch does not have a chilling effect on innovation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Preprints of the Max Planck Institute for Research on Collective Goods ; No. 2013/7

Classification and Topics

• Classification: Wirtschaft ; Public Goods ; Innovation and Invention: Processes and Incentives ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Property Law ; Design of Experiments: Laboratory, Individual ; Externalities ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Open Source Products and Markets ; Firm Behavior: Empirical Analysis
• Subject: innovation ; imitation ; appropriation ; patent ; fairness of desert

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Engel, Christoph ; Kleine, Marco
• Event: Veröffentlichung
• (who): Max Planck Institute for Research on Collective Goods
• (where): Bonn
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/84991
• Last update: 10.03.2025, 11:44 AM CET