A SURVEY OF THE ECONOMICS OF PATENT SYSTEMS AND PROCEDURES

The last several decades have seen increases in patenting activity worldwide, as well as growing issues related to patent quality. In response to these quality issues a recent patent literature has emerged, that investigates the behavior and incentives of patent examiners, applicants, and third parties. In this paper, we provide an overview of patent procedures, patent systems and a survey of the new economic literature on patent systems. Both theoretical and empirical papers are considered. Policy implications coming from this literature are presented.     

Risk and risk management of spillover effects: Evidence from the literature

In this article, we provide a comprehensive review of the existing theoretical and empirical literature regarding spillover effects (effects of a crisis event in an announcing firm on other firms). In particular, we focus on the mechanism behind spillover effects and investigate factors that drive spillover effects. The results of our literature analysis show that spillover effects are most often significantly negative, that is, lead to losses in nonannouncing firms and depend on certain events and firm characteristics. On this basis, we derive implications for the risk management of spillover effects. Taking previous work on certain individual risk‐management measures into account, we are the first to provide a holistic spillover risk‐management process.     

Proliferation of Brewers’ Brands and Price Uniformity in Canadian Beer Markets

In this paper, we study retail pricing in Canadian beer markets, where access to the liquor distribution system and the retail price list is restricted by government ownership and control of the system. We consider alternative explanations for price uniformity in the differentiated beer products market. While an analysis of retail beer price data from six Canadian provinces for a 10-year period shows that no single explanation of price uniformity strongly dominates the others, some of the results are consistent with menu cost and demand uncertainty theories of price uniformity.     

The geographic distribution of environmental inspections

Models of the enforcement of environmental regulations regarding point source pollution suppose that the probability of inspection or audit is independent across facilities. However, there are a number of reasons why regulators may choose to inspect many sites in a particular geographic area at one time. If the probability a site is inspected also depends on its compliance behavior, the expected payoff from choosing to violate will depend upon the compliance decisions of neighboring sites, creating a game of strategic interdependence between firms. In this paper, we use a dataset of inspections at petroleum storage sites in Manitoba between 1981 and 1998 to consider to what extent inspections are spatially correlated and whether inspection probabilities are a function of the inspection and violation history of the site and its neighbors. Further, we examine to what extent firms take into account whether their neighbors have been previously found in violation in determining compliance.     

The Impact of Search and Recommendation Systems on Sales in Electronic Commerce

The Internet and related technologies have vastly expanded the variety of products that can be profitably promoted and sold by online retailers. Furthermore, search and recommendation tools reduce consumers’ search costs in the Internet and enable them to extend their search from a few easily found best-selling products (blockbusters) to a large number of less frequently selling items (niches). As a result, Long Tail sales distribution patterns emerge that illustrate an increasing demand in niches. We show in this article how different classes of search and recommendation tools affect the distribution of sales across products, total sales, and consumer surplus. We hereby use an agent-based simulation which is calibrated based on real purchase data of a video-on-demand retailer. We find that a decrease in search costs through improved search technology can either shift demand from blockbusters to niches (search filters and recommendation systems) or from niches to blockbusters (charts and top lists). We break down demand changes into substitution and additional consumption and show that search and recommendation technologies can lead to substantial profit increases for retailers. We also illustrate that decreasing search costs through search and recommendation technologies always lead to an increase in consumer surplus, suggesting that retailers can use these technologies as competitive advantage.     

The Schweinkopf hypothesis: Empirical evidence and refutation from Mansakonko

One of the central theorems in statistics is challenged by reported observations from the community of Mansakonko. This ambiguity threatens the precision of economic projections and thus development programme management. A review of the Mansakonko case suggests that the data supporting these observations are as accurate as can be expected under field conditions. Practical consequences of the apparent theoretical inconsistency led to an international games‐playing situation in which a transitory win‐win solution was achieved. Further research (s suggested to definitively resolve the theoretical impasse.     

Electronic transportation marketplaces: a transaction cost perspective

Electronic transportation marketplaces (ETMs) are Internet-based mechanisms that match buyers and sellers of transportation services. With claims of reducing the administrative costs of transportation procurement to virtually nothing, the allure of ETMs is considerable. Shippers (transportation buyers) must therefore determine whether to pursue the new-founded opportunity and buy transportation services through an Internet-based intermediary or to buy services in a traditional manner. To date, there has been little structured thought on the topic to guide managers. Transaction cost economics (TCE) provides a robust framework toward this end. The TCE framework is adapted to present the procurement decision as one of “make” versus “buy.” The analysis is designed to help firms navigate their own determination to use an ETM and, when considered, the most appropriate form of ETM. The merits and caveats of ETM adoption are presented in the article.