The Economics of Innovation Economics 124 Lecture MW 8-9:30am, 597 Evans Suzanne Scotchmer, Professor of economics, Professor of law, Professor of public policy

Prerequisities: Microeconomics.

Main text (also available in Japanese and Chinese):  Innovation and Incentives (S. Scotchmer, MIT Press 2004).

Course requirements: Attendance and participation (30%) (I will take attendance) and final exam (70%, exam group 4, Monday Dec 12, 7-10pm in room 2, Evans). The exam will be based on weekly review questions, which will be linked to the syllabus on Thursday mornings.

 

Description:
The course starts with a short overview of the institutions that have historically supported innovation, then considers knowledge as a public good, the design of incentive mechanisms such as prizes and intellectual property, different models of cumulative innovation; the relationship of competition to IP licensing and joint ventures, patent and copyright enforcement and litigation, private/public funding relationships; patent values and the return on R&D investment, intellectual property issues arising from direct and indirect network externalities, and globalization.

 

Date	Topic	Required Chapter	Other reading and lectures. If required, there is a star.
Week 1 Aug 29 Sept 1	Institutions for Innovation: A Brief History	Ch 1 Review Questions	*The Case of Japan (R. Aoki)
Week 2,3 Sept 5,7 Sept 12,14	Investing in Knowledge	Ch 2 Review Questions	*Prizes for science
Week 4 Sept 19,21	IP Law basics	Ch 3 Review Questions	Patent Reform Act 2011 * E.A. Crowne Pounds of Flesh, the Merchants of Parma and Ham-Lets *International Herald Tribune on Google's Belgian news wars USPTO guidance on mathematical algorithms Gottschalk v. Benson (supreme court on algorithms)
Week 5 Sept 26,28	Design of IP: length and breadth The $800m pill	Ch 4 Review Questions	*McDonalds Patent Application on how to make a sandwich and a plant patent *In re Bilski Genentech and the Stolen Gene, Innovaro
Week 6/7 Oct 3,5 Oct 10,12	Cumulativeness in Research	Ch 5 Review Questions	*Spitting Image (Inkjet Printer), Sept 19, 2001, The Economist *Invention of Email, Pretext Magazine 1998.  *Neem Tree Insulin Gene Wars
Week 8 Oct 17,19	Antitrust and Licensing	Ch 6 Review Questions	*U.S. v. U.S. Gypsum (factual summary)
Oct 24,26	Open Source as an Incentive Mechanism	Maurer	*Maurer, Sali & Rai. 2004 Finding Cures for Tropical Disease: Is Open Source the Answer?, Public Library of Science: Medicine 1:56-58. *Lerner and Tirole, Economics of Technology sharing: Open Source and Beyond
Week 10+ Oct 31 Nov 2 Nov 7	Enforcement	Ch 7 Review Questions	*Business Software Alliance piracy study (trade organization) *the Selden automobile patent *Oracle v SAP complaint (to page 7) *Wall Street Journal article on Oracle judgment
Week 11+ Nov 9 Nov 14, 16	Role of the Public Sector	Ch 8 Review Questions	*Profits and the university: the case of Ignacio Chapela from Counterpunch, 2004 Ignacio Chapela and Mexican maize Should Universities accept Tobacco Money? *Gerth and Solberg, Drug Makers Reap Profits on Tax-Backed Research NYT April 2003
Week 13+ Nov 21,28 not 23	Network effects	Ch 10  Review Questions	Metcalf's Law *Katz and Shapiro Surowiecki "In Praise of Third Place" (The modern game market)
Week 14 Nov 30	Innovation in the global economy	Ch 11  Review Questions	Nature July 15, 2004. Scientific Impact of Nations *Klaus Eichmann, Koehler’s Invention, Ch. 8 (on the patenting of monoclonal antibodies) *Malaria Drug Artemisinin YouYou article, Science article