We model an employee's decision to pursue an innovative idea at his employing firm (internally) or as a start-up (externally). We characterize an idea by its market profitability and the degree of positive/negative externality that it imposes on the employing firm's profits. The innovation...

We present a model of process innovation that offers an explanation for the negative relationship between patent strength and R&D investment. We show that under the popularly used damage rule of reasonable royalties, the innovator might favor imitation. Since imitation is discouraged for strong...

We study an infinite-horizon cumulative innovation model, in which patents are characterized bytheir length and the likelihood of being ruled valid in a patent infringement litigation. Strengtheningpatent protection via a greater validity or length has two opposing effects on innovation: 1)...

We examine the market power of a seller who repeatedly offers upgraded versions of a product. In the case of pure monopoly, the seller also controls compatibility across versions. In the case of an entrant who offers an upgrade, the incumbent seller also controls subsequent interoperability...

We analyze the general-equilibrium effects of alternative regimes of access rights over renewable natural resources – namely, open access versus full property rights on the pace of development when economic growth is endogenously driven by both horizontal and vertical innovations. Resource...