miscellaneous factZ

It would be interesting to chart over time the progress of open-source, standards compliant, Mozilla-type web browsers (e.g. Firefox) versus Microsoft’s Internet Explorer. As is often the case in other areas, it is not easy to get good (open) data over a reasonable time period. The graph below shows browser market share as measured by the browser usage of visitors to the W3Schools website (data source on Open Economics plus the code to extract original data into this usable form).

Browser Market Share (NB: Firefox was released in Nov 2004 but not listed separately by W3Schools until 2005)

Given the source, and therefore the bias towards more technically savvy users, these figures probably overstate Firefox’s market share somewhat, though the overall trend is probably largely correct. What we see is a steady and continuing increase in Mozilla (Firefox) market share ever since Firefox’s launch in Autumn 2004 and a concomitant decline in market share of IE (the little dip for Firefox at the end appears to be directly attributable to the launch of Google’s chrome). What is particularly interesting is that, at least for W3Schools users, we are almost at the point where there are as many people using Firefox as IE. This is significant for several reasons.

First, because of its level of usage it will no longer be possible for websites to only ‘work in IE’ but instead will always have to work in Firefox as well. This is both good for Firefox and for the standards-compliant browsers more generally (while, of course, Firefox itself is not perfectly standards compliant it has traditionally been much better than IE).

Second, it is an (unusual) example of a case where dominance has not been maintained. Generally a firm with established dominance in a given area is able to maintain — witness the robustness of Microsoft’s established dominance in other areas. By contrast, in this market, as the graph shows, Firefox has almost drawn level with IE and may soon surpass it if the trend of the last few years continues.

5/10. Mediocre Bond especially when compared to its predecessor (on which it heavily depends). Its makers seemed to think that they could make up for the total absence of coherent plotting by providing a set piece action scene or a killing every five minutes. Sadly action and violence, without a narrative to frame them, ultimately become both gratuitous and, worse, monotonous.

The human problem of ’scarce resources and unlimited wants’ is oft-posited as a primary motivation for studying economics. As this phrase makes clear, ‘wants’ (’preferences’ to use the more usual terminology) are a central part of what we study, and the existence, and stability, of those ‘wants/preferences’ therefore merit serious consideration.[^1]

[^1]: It is interesting how the term ‘preference’ is studiously neutral, and almost anodyne in comparison with a term such as ‘want’, ‘desire’ or even ‘need’, each of which is a potential synonym. One might imagine, and this is simply conjecture, that the term was intentionally adopted in order to remove any overtone of judgement. After all, across most culture and over much of human history, the formation and satisfaction of ‘preferences’ has been a process laden with ethical, and religious, significance.

Few of us have difficulty accepting the fundamental nature of our desire for food and shelter. However, many of us might have greater difficulties assigning the same fundamentality to the desire for a particular brand of designer perfume or a digital music player. In fact, it is unclear to what extent one can want what one has never known (or conceived of), and thus, while it is not difficult to imagine any human desiring food and shelter — especially when they are absent, it is hard to imagine a stone-age nomad, say, even being able to conceive of designer perfume or iPods (let alone feel their lack).

It is also telling that so many of the consumer goods, especially those away from the necessity end of the spectrum, appear to require active promotion to the public. Of course it is true, as economists are particularly fond of pointing out, that advertising has an informational component — simply letting you know about the existence and attributes of products. However, it is also hard to deny that advertising also has a substantial ‘persuasive’ component, operating either to create preferences or alter existing ones.

If so this has important implications. In particular, it strongly suggests that our wants aren’t simply given but are, at least to some extent, formed by our experience and choices.[^2] This raises some deep and important questions for economists to answer — questions with a major bearing on the state and direction of many modern societies. It also has some direct connections with one of the oldest, and most philosophical, of the world’s religious traditions: Buddhism. Central to Buddhist teaching are the Four Noble Truths. Succintly put these are, in order:[^3]

[^2]: In economics jargon: preference are endogenous (i.e. determined within the system) rather than exogenous (fixed externally — e.g. by ‘nature’). The study of endogenous preferences is certainly not new. See for example the review of Bowles (1998) or the early incorporation of changeable preferences into the ‘traditional’ framework by Becker and Stigler (1977).

[^3]: These translations of the Dhammacakkappavattana Sutta are taken from http://www.accesstoinsight.org/tipitaka/sn/sn56/sn56.011.piya.html

1. (Dukka — The Nature of Suffering) ”Birth is suffering, aging is suffering, sickness is suffering, death is suffering, association with the unpleasant is suffering, dissociation from the pleasant is suffering, not to receive what one desires is suffering — in brief the five aggregates subject to grasping are suffering.”
2. (Samudaya — The Origin of Suffering) ”It is this craving (thirst) which produces re-becoming (rebirth) accompanied by passionate greed, and finding fresh delight now here, and now there, namely craving for sense pleasure, craving for existence and craving for non-existence (self-annihilation).”
3. (Nirodha — The Cessation of Suffering) ”It is the complete cessation of that very craving, giving it up, relinquishing it, liberating oneself from it, and detaching oneself from it.”
4. (Marga — The Path to Cessation of Suffering) ”It is the Noble Eightfold Path, and nothing else, namely: right understanding, right thought, right speech, right action, right livelihood, right effort, right mindfulness and right concentration.”

Why is this teaching relevant here? First, observe a commonality: both economics and Buddhism takes unsatisfied ‘wants’ (or ‘cravings’) as a source of unhappiness. But how do go about solving this problem? Here economics and Buddhism part ways, and rather dramatically, with the Four Noble Truths presenting a path to the achievement of well-being which is almost diametrically opposite to that advocated by economics.

Specifically, the ‘economics’ approach, is based on taking preferences as given and focusing on generating the goods to satisfy them. By contrast, Buddhism sees ‘wants’ as ultimately unsatisfiable, and instead proposes that the way to well-being is not to satisfy them but to relinquish them — while some ‘cravings’ can be temporarily satisfied more will always be generated, moreover there some fundamental desires, such as the wish not to die, cannot be addressed in the material world.

Put starkly: economic thought directs our energy efforts to satisfying our wants taking them as given while Buddhism directs those self-same energies to altering our wants, and views most attempts to satisfy them by obtaining ever more ‘things’ as inevitably doomed to failure — in fact, actively counter-productive as more ‘wants’ are generated by the very process of satisfaction.

The Open Knowledge Foundation (which I’m involved in) is co-organizing with MySociety and OPSI, a Workshop on Finding and Re-using Public (Sector) Information.

The event takes place this Saturday (1st of November) at the London Knowledge Lab near Holborn in London. Full details in this OKFN blog post and you can sign up the wiki page:

http://okfn.org/wiki/PublicInformation

6.5/10. Intriguing, sweet (but not saccharine) piece featuring Nanni Moretti as a man who loses his wife in a freak accident and then spend the next couple of terms hanging out in the park outside his daughter’s school (ostensibly for her benefit but primarily for this own it would seem).

As part of my research work on knowledge production, particularly how it relates to the intellectual property regime I’ve recently been looking at film/movie production over time. Thanks to the semi-openness of http://www.imdb.com/ we have a fairly comprehensive database of statistics available. Combining this with the excellent IMDbPY scripts and my own home-brewed code and I was able to start extracting some basic information on movie production over time.

Points to note about the dataset:

• IMDb includes information both on films scheduled to be released, in production etc. This explains why there are data points for years in the future. These values should probably be ignored.
• It is not clear exactly how comprehensive the IMDb dataset is — and more importantly how its comprehensiveness varies over time. One might be concerned that some periods (especially early ones) are under-represented in the database in which case the figures shown will be somewhat biased.

Production as Number of Titles

Movie production as measured by titles has shown marked rises and falls over time. Specifically there is a major expansion in the 1910s followed by a sharp fall in the 1920s with continuing decline until the end of WWII (1945). Following that production steadily increased up until the 1990s when is started to grow much faster. By the mid 2000s the number of titles had broken the 10k a year barrier. We do need to be cautious here, as the number of titles may be highly misleading measure of production over time (see next section). However it is reasonable can compare across countries.

World film (blue) and US film (red) production (number of titles)

UK film production (number of titles).

While production is substantially lower than the US the overall trend is very similar.

Indian film production (number of titles).

This shows a rather different trend. First production only really begins in the mid-1920s, and perhaps most interesting of all, production actually drops from the mid-1980s through to the mid 2000s. Here, however one needs to be especially concerned about IMDb’s coverage (the number of titles looks rather low particularly for recent years).

Production as Running Time

It is not clear that the number of titles is the correct measure of film production. After all a short of 5 minutes and 2.5 hour blockbuster both get counted equally. Thus, here we use total running time as a measure of production rather than the raw number of titles. As one can see this gives a rather different picture: there is a relatively smooth (and almost linear) trend upwards from 1900 to around 1990 followed by a massive explosion.

World production (running time)

6.5/10. A compelling story of redemption driven by simple but solid story and excellent acting (esp. from Scott Thomas). The twist in the tail though was a great mistake.

Last Friday I attended an ESRC Research Workshop on Well-Being held at the LSE. According to the blurb:

The time is ripe for a major expansion of well-being research in Britain – in conjunction with leading overseas colleagues. Among public policy-makers, there is an increasing desire to promote well-being and a need for evidence on what works to promote it. And among social scientists there is a new capacity to throw light on well-being: its causes and its effects. Worldwide, research on these topics has already demonstrated the scope for rapid and important advances in knowledge. But the scale of such research in Britain is far too small. This one-day workshop has been organised to explore the possible intellectual content of such a cooperative endeavour.

Some of the most prominent researchers in this area were in attendance to give an overview of current work and I took some ‘impressionistic’ notes which can be found below.

Well-being Research: the Way Forward by Daniel Kahnemann

• Living and thinking about it
• Attention
• There are 2 selves
  • Experiencing self
  • Remembering/Score-keeping self
• Used to think that experiencing self was what was important (Edgeworth)
• Remembering self not very accurate — cites own research on pain for medical procedures
• But now thinks remembering self is more important
  • Implicit in this is an acceptance that there are at least 2 distinct dimensions
• Current well-being/happiness questions are problematic because they are mixed containing some experiencing self and some evaluative/remembering self
• New, huge, dataset from Gallup is making a big difference
  • 1000 people polled a day with 40 questions on well-being
• Ladder of Life question in Gallup measures ‘Life Evaluation’
• Despite having different questions replicates existing results from DRM etc
• Attention and ‘Focusing Illusion’
  • Norbert Schwarz study: how much pleasure do you get from your car
    • Reasonable correlation with car monetary value
  • Also asked: how much pleasure did you have in your commute this morning
    • Zero correlation with monetary value
  • How many dates did you have last month and how happy are you these days
    • Happy first, dating second no correlation in response
    • Reverse order: large correlation
  • Leads to errors in prediction since we know attention alters valuation
    • e.g. to predict pleasure/utility from car need to ask: how much enjoyment do I get from car when I do not think about it
    • How happy would you be if you moved to be the california
    • But this is mistaken [ed: is this not often taken into account as evidenced by phrase ‘always think the grass is greener’]
• Gallup data: huge correlation with money
  • Remembered happiness: Money worries, health coverage, general health are main predictors
  • Experienced happiness: pain + social activities
  • Children: negative impact on general impact but when asked about children people are very positive — both views are correct
• Easterlin hypothesis:
  • Some questioned this (Stevenson and Wolfers)
  • But focus on ladder of life question
  • Looking at positive/negative affect still find that within-group slope with income is steeper than across group/time effect (i.e. Easterlin hypothesis)

Income and happiness in developed countries by Steve Nickell

• No obvious relationship on the ladder of life question
  • But cross-country regressions are pretty dubious (too many variables)
• Time-series data
  • Happiness regressed on log and quadratic in log income plus controls — pretty good fit
  • Curvature for classic CES: y^{1-rho} get rho ~ 1.2 across a whole variety of countries (1.1 - 1.4)
  • Time series: happiness is pretty horizontal (in the US) though income risen lot (even taking account of dispersion)
  • Some reasonable support for relative income hypothesis
• But really want panel data (deals with endogeneity)
  • Only one such panel: GSOEP (West Germany)
  • Regress happiness on log income, log reference income, controls (state,year,individual dummies etc)
  • Income alone: large +ve coefficient
  • Include relative income: income coefficient disappears

Income and the Evaluation of Life by Angus Deaton

• Gallup’s World Poll
  • Why it’s great [ed: the value of having early access to proprietary data!]
• Gallup result is very similar to the World Values Survey (His paper from last year — [ed] see my comments last year)
• Could argue that steep and then flat but log sems to fit better
  • Difference here with Steve Nickell
• Within country analysis
  • Collecting income data within country is hard particularly in poorer countries
  • Get figure of about 0.6 (effect of increase of 1 in log income on ladder)
• What about Easterlin?
  • Does some analysis in the US and does not get relative income affects at all (with ladder question)
• Suppose people do care about relative income. There are serious (’ethical’) problems with a consumption tax or not worrying about GDP growth: you hurt the non-envious and help the envious

Questions on Preceding

• My question:
  1. If focusing illusion is common across goods does it actually end up leading to bias in/incorrect choices
  2. Once we accept that attention has such large effects it poses difficult questions since it suggests that people’s preferences/enjoyment has a significant endogenous component.
• Several on relative income
• Replication across countries

Workshop on happiness research by Michael Marmot, Andrew Steptoe, and Jane Wardle

Michael Marmot

• Health as a measure of well-being
• 28 year gap in life-expectancy between poorest part of Glasgow (Galton - 54) and richest (Lenzie - 82)
• Major wealth effects on health outcomes even though (e.g. in the UK) people have all got enough to have pretty good healthcare
  • Relative effects of income (status?) has a major impact on health
  • Relative position not relative income (income != status — at least not always)
• Control for environment
  • Whitehall II study: look at poor physical health by deprived living area and grade level in civil service. Deprivation really matters when you are in the lower grades. [ed]: Suggests a) interaction effect b) that status matters more than area you live in
• Work stress: Coronary heart disease strongly linked to work stress
• Social relationships: mainly important on negative side (bad interactions are bad for you …)
• [ed: general murmurings from room throughout data presentation about what these correlations imply. Significant issues of causality and selection bias …]

Andrew Steptoe

• Meta analysis of positive affect and health
  • 18% reduction in prob. of mortality (even when controlling for other variables: smoking, BMI, social position etc)
• Issues:
  • Confounding: even though have controls direction of causation goes the other way (health to positive affect)
  • Genetics: simple correlation
  • Lifestyle: happier people lead healthier lives (or vice-versa)
  • Biology: positive affect associated with
    • Lower cortisol over working and non-working days
    • Lower heart rate over day
    • Lower systolic BP over the day
    • Reduced inflammatory responses
    • Independent of socio-demographic factors
• Happiness measure matters (a lot)
  • Using retrospective questionnaire measures find no relationship of positive affect with other stuff
  • But using EMA or DRM (i.e. more instantaneous stuff) find relationships
• Cross-cultural comparisons: Japan vs. the UK
  • Japan reports less +ve affect then UK (e.g. Gallup)
  • Find this in DRM studies of university women
  • And, importantly, find impact on cortisol levels (UK women lower than Japan)

Mapping Pain and Well-Being in Real Time and Yesterday by Alan Krueger

• Study in the Lancet (w/ Arthur Stone) on pain in general population (using diary study)
  • Data came from PATS, ~3900 people (by Gallup)
  • Pain rises with age but very flat 45 - 65 (for men and women)
  • Correlated with SES: poorer people in more pain (~20% of people with income under $30k in reasonable to severe pain compared to 7% for > $100k)
  • People in pain work less and watch more television
• Now doing EMA-PATS study + biological info (Krueger and Stone)
  • Check EMA and PATS are related (strongly correlated ~ 0.94 corrected for pain, and 0.92 corrected for happiness)
  • Not a representative sample (v. hard to get participants)
• A world of pain — use Gallup survey to look at pain across countries
  • Strong connection of GDP per capita and pain (~ -0.42 correlation)
• Questions:
  • Why SES-Pain gradient and Age-Pain gradient? Many possible explanations
  • Source/duration of pain
  • Biomarkers

Knott and Scott

• Examples of kids with cerebral palsy and some other bad thing: expectations matter (despite having serious disabilities kids evaluated their life as as good as others)
• Support only: no effect
  • Homestart: no effect or negative!
  • Surestart: also been shown not to work
  • …
• Skills and support: slightly better
• Child Antisocial behaviour: benefits
• Quality of mental health professionals: matters a lot
• Very little long-term follow-up data
  • Perry pre-school: good effects at age 27
  • 10 years follow-up of Scott et al (2001) finds some long-term effects
• More evidence based psychiatry
  • Quite a lot we can do if we do it in a skillful way

Well-being and Aging by Felicia Huppert

• Negative stereotyping has large impact
  • Older people exposed to -ve stereotypes do worse on stress, cognitive performance etc
• Causes of well-being
  • Separate +ve and -ve in GHQ (found a big difference in impact of e.g. unemployment on +ve vs -ve affect)
  • Magnitudes (as opposed to pure significant)
  • What are important drivers
• Environmental affects likely to be large (much larger than genetic affects)
• Study in US IT company: RCT of mindfulness meditation found substantial impact
• How much is society losing from people not flourishing [ed: losing seems to mean losing money/GDP here]

Work, Stress and Well-being by Richard Freeman

• Questions
  1. Does working environment affect worker well-being
  2. Can we specify workplace policies/practices make work lives better
  3. Do measures of job satisfaction and well-being provide different information
  4. Moving beyond survey measures
• Job satisfaction - one of most widely studied variables
  • Correlated with health and turnover (people leaving associated with dissatisfaction)
  • Two-factor model needed to explain some patterns
    • Puzzle: unionized workers quit less but also less satisfied (expectations?)
  • Job satisfaction and well-being
  • When people quit and go to a new job their satisfaction goes up
• Results from various datasets they used (WERS - several people per workplace + a lot of detail)
  1. Working environment matters a lot (could be workplace policy, culture, or selectivity)
     • Workplaces bad (good) in one dimension often bad (good) in others
     • [ed: so not some simple trade-off/optimization]
     • Large changes in well-being after quitting and moving elsewhere (bigger than money impact)
       1. Policy/practices matter but causality unclear
     • Major endogeneity problems (if i have a job satisfaction policy is that because people are miserable)
     • Well-being related with job attributes (hazardous, stress etc) in normal way
       1. Job satisfaction and worker well-being
     • Not that correlated
     • Job-satisfaction important for well-being but less important that health and various other variables
• 3 things to do
  1. Biomarkers at high/low satisfaction workplaces
  2. Impact of change of jobs
  3. Harvard network on work, family and health
     • Check company work policy carefully
     • Look at health outcomes, stress, sleep
     • Found big correlation of manager’s attitudes and practices correlated with cardiovascular outcomes

Co-operation and well-being by Armin Falk and David Skuse

David Skuse (development neuro-psychiatrist)

• Individual differences in happiness
• Role of genes and brain on behaviour
• Mechanisms of mental functioning underlying mental health
• Compensation for deficiencies …

Armin Falk

• [ed: computer battery ran out so this is very partial]
• Relative pay and fMRI results. Big impact of relative pay (Science 2007)
• Unfairness in principal agent setup (dull task and unfair division of revenue. impact on heart rate variability)
• Oxytocin study: look at genetic variations affecting oxytocin and see how they impact on trust in trust game (amount sent at stage 1)
• Mentioned current/future research on cultural formation on preferences

Last Friday and Saturday I was at the 2008 European Policy for Intellectual Property (EPIP) conference, held this year in Bern. I presented my paper on the optimal term of copyright and discussed a paper of Luca Spinesi’s on ‘Imperfect IPR enforcement, inequality, and growth’. Below can be found ‘impressionistic’ notes from some of the other sessions I had a chance to attend.

Jim Bessen: How can and how should economics inform patent policy?

• What is aim of ‘Property Rights’
• Look at example of tradable permits for pollution
  1. Do institutions do their jobs
  2. Resources (is air cleaner)
  3. Social welfare
• For patent system, thanks to recent work, first two are within our reach (though not within our grasp)
• Institutions. Want:
  1. Specificity
  2. Searchability
  3. Predictability
  4. Transactability
  5. Enforceability
• Patent system is not doing so well
  1. Specify: reasonable but lots of debate about what claims mean (40% overturn rate on appeal of district court decision re. claim construction)
  2. Search: pretty poor (esp. in ICT). Many firms do not bother to search.
  3. Predictability: low (e.g. no defense insurance)
  4. Transact: can be anti-commons
  5. Enforce: pretty unpredictable
• Resources (Innovation)
  • Patent system is not doing so well due to overlapping claim (pooling problem)
  • Fuzzy boundaries: dispute costs
    • Value patents (upper bound from renewal, re-assignment, int’l filings, firm market value, surveys, case-studies)
    • Dispute costs (lower bound)
    • For pharma: value ~ $12 billion/year, costs ~ $1 billion
    • Other industries: value ~ $2 billion/year (from 80s to present), costs ~ $1 billion / year up until mid 90s since when they have spiked and now much higher than value — e.g. in late 90s costs 3x value
    • Could use fees to address this (raise from ~$5000 to ~$30000)

Reto Hilty: Enforcement of intellectual property rights on Enforcement of IPRs

• Huge figures circulate about losses from piracy
  • Most figures are (very) dubious and produced by the industry
• History of IPRED (and IPRED2)
• More intl stuff:
  • TRIPS+
  • FTAs (US)
  • EPAs (EU)
  • ACTA
• Why has this focus on enforcement happened
  • General mantra that strengthening IP rights is good for innovation
  • Patents: probably have over-protection
    • Full patent protection (EPC 1973) — i.e. patent covers subsequent uses even if not anticipated. (probably a mistake)
    • Biological substances — full patent protection particularly problematic
    • Software patents …
    • Drugs and developing countries
  • Copyright law
    • Internet users see constriction not justice
    • Entertainment + TPMs — “unjustified profits”
    • Scientific research: unnecessary constrictions (Open Access)
  • Industrial design
  • Trade-mark law — large extensions in the last 80s (protection of colours, shapes unjustified)
  • Eventually this constant extension generated such opposition that it is now at a standstill
  • Thus, rightsholders move focus to enforcement (focus on ‘efficiency’)
• But stronger enforcement also causes problems [ed: the strength of a right in fact is is product of enforcement and strength in theory]
  • will there be a backlash?
• Also extension of IP geographically — esp. to developing countries
• What justifications are there for IP enforcement
  • IPR not valuable without some enforcement, certainty …
• One size cannot fit all: whether for IP itself or for enforcement
  • If IPR is misused enforcement can make things worse
• Suggestions:
  • Decriminalize where too much IP protection
  • Strengthen enforcement where IP truly detrimental
  • Distinguish IP protection from consumer protection (counterfeiting not the same as IP protection)
  • [ed: one concern here is that it seems here we are using enforcement/non-enforcement to correct IP rights which are themselves wrong — enforce where good, don’t enforce where not good. But if that were agreed why couldn’t we correct the underlying problem]

Davis, Davis and Hoisl: Leisure time invention

• PatVal data (10.5k German patents sampled with survey of inventors)
• Leisure time has +ve impact on inventive output
• Leisure time invention +vely linked to interactions with co-workers and outsiders
• More leisure time invention in conceptual-based technologies rather than science-based technologies
• Incidence of leisure time invention will be -vely related to project size
• Most hypotheses confirmed

Ashish Arora: Patents and Innovation

• Evidence for benefits of patents on innovation is mixed
  • Example of early Swiss and German dye and chemical industries
  • Surveys main evidence which show there are rents from patents but with equivalent subsidy ratio that is not that high
• Kyle and McGahan: no inducement of research in diseases of poor countries after TRIPs
  • Even if patent protection is important no reason for developing countries to have them (already have protection in developed countries)
• Thickets, patent litigation and trolls
  • Cockburn MacGarvie and Mueller (2008): fragmentation increasing across all industries
  • Substantial litigation costs
  • Geraldin, … find no thicket problem in 3G telephony
• Anti-commons
  • Completely unpersuaded by the evidence
  • All examples came from universities: US research universities have made a mess of tech-transfer and patenting, alienating faculty and angering corporate partners (Bayh-Dole has had significant unintended bad consequences)
• Markets for technology (specialization)
  • The first order effect of patents may be on trade in technology
  • Having people whose business it is to sell technology is really important (particularly if you are a developing country)
  • Licensing flows in US: $66 billion in 2006 (Carol Robbins). Good proportion of domestic R&D
  • Hall and Ziedonis evidence on specialist semiconductor firms
  • Gambardella and Giarratana (2007): software security patents
• Making patents more useful
  • Much of the problem is bad patents due to:
    1. Invention is poorly understood (underlying knowledge base is poor)
    2. The claims are written with the intent of claiming as much while revealing as little as poorly understood
  • ‘Metes and bounds’ of the patent are unclear to all except handful of patent lawyers
  • Not new: cf. German chemical industry back in 19th century
  • Solution:
    1. Force patents to be written using (i) standard terms (ii) without legal jargon (whose only justification is a futile reach for precision)
    2. Patents should be (i) published expeditiously (ii) transactions (licenses, assignments, beneficial interests) in patents should be recorded and disclosed

Survey on Patent Licensing: Dominique Guellec (OECD)

• Why licensing out:
  • Value from unused inventions
  • Inventions with applications elsewhere
  • Fabless firms
  • Establishing technology as a standard (may raise Competition issues)
  • Cross-licensing deals (ditto)
• Expected Economics Effects (+ve)
  • Increases diffusion
  • Reduces duplication
  • Boost downstream competition
  • Facilitates specialization
• Can also be -ve (mirror image of +ve ones e.g. reduced duplication = less competition)
• Graph showing huge increase in royalty/license payments since mid 80s: ~$10B/year to ~$110B/year) (source: world bank)
  • But how much of this real (i.e. not tax manipulation etc) — and also includes copyright etc
• OECD survey implemented by EPO by JPO/University of Japan on licensing behaviour
  • focuses on licensing out
  • response rate: 42% in europe, 34% in japan [ed: japan responses are less reliable for reasons not entirely clear to me]
  • no questions on revenues (people don’t respond when you ask this — either don’t know or don’t what to tell)
• Results:
  • 35% of european companies license out, 59% of japanese firms
  • Licensing to non-affiliated companies: 20% of Eur, 27% of Japanese
  • U-shaped prob of licensing as a function of size
  • By tech field: highest in chemistry and electronics
  • Younger companies do it more (controlling for size) [ed: issues here though. Old firms which are small are not the same as young firms that are small]
  • Why do it?
    • Earning revenue: 60% EUR, 52% JPN; cross-licensing: 18%, 18%
  • Patents you would have licensed but could not/did not: ~20%
    • Why? Difficulty of finding a partner (25% of EUR and 18% of JPN)
    • Not important: problems of drafting contracts or technology not mature
• Difficulty of finding partners could be for several reasons but suggests could be role for more/better intermediaries to facilitate transactions (INPIT in Japan)

Patent Thickets and the Market for Ideas: Mark Schankerman (LSE)

• Market for ideas (patent licensing and sale of patents) [ed: this is obviously not the whole market for ideas …]
• Study market though new lens: settlement of patent infringement disputes
  • Do not know whether when settlements happen licensing actually occurs
• Focus on 2 key aspects:
  • Fragmentation of rights (’patent thickets’)
  • Certainty of enforcement (CAFC led to more certainty — not worrying here about pro-patent bias)
• Fragmentation:
  • Trad story: bad (higher transaction costs, bargaining failure …)
  • Dissenting voice (Lichtman 2006): greater fragmentation lowers the value at stake in each negotiation and this reduces the incentive to bargain hard. This speeds up settlement. Of course still leaves question of whether this reduces total negotiation time.
• Model gives us various hypotheses:
  • H1: more complementarity means longer negotiation
  • H2: more fragmentation means shorter negotiations
  • H3: Settlement negotiations will be shorter for patents litigated after CAFC (1982)
  • H4: Impact of fragmentation external rights will be lower after the introduction of CAFC
  • H5: CAFC has a bigger impact where the preceding circuit had more uncertainty
• Results
  • More fragmentation: leads to lower dispute duration (19.6 months for < 50th percentile frag vs. ~16 months for > 90th percentile)
  • CAFC has a big effect on dispute duration (~33 months to ~18months)
• Conclusion: looking at delay (not royalty stacking on other issues)
  • Certainty: good
  • Fragementation: not bad (and maybe good)

I’ve just put out an updated version of my paper on Search Engines entitled: “Is Google the next Microsoft? Competition, Welfare and Regulation in Internet Search”, the original version of which went up in June. The revised version is available either from SSRN:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1265521

or from here:

http://rufuspollock.org/economics/papers/search_engines.pdf

Abstract

Internet search (or perhaps more accurately `web-search’) has grown exponentially over the last decade at an even more rapid rate than the Internet itself. Search engine providers such as Google and Yahoo! have become household names, and the use of a search engine, like use of the Web, is now a part of everyday life. The rapid growth of online search and its growing centrality to the ecology of the Internet raise a variety of questions for economists to answer. Why is the search engine market so concentrated and will it evolve towards monopoly? What are the implications of this concentration for different ‘participants’ (consumers, search engines, advertisers)? Does the fact that search engines act as ‘information gatekeepers’, determining, in effect, what can be found on the web, mean that search deserves particularly close attention from policy-makers? This paper supplies empirical and theoretical material with which to examine many of these questions. In particular, we (a) show that the already large levels of concentration are likely to continue (b) identify the consequences, negative and positive, of this outcome (c) discuss the possible regulatory interventions that policy-makers could utilize to address these.