BY: STEVEN SHAVELL
Harvard Law School
National Bureau of Economic Research (NBER)
TANGUY VAN YPERSELE
Tilburg University
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=145292
Other Electronic Document Delivery:
http://www.law.harvard.edu/Programs/olin_center/
SSRN only offers technical support for papers
downloaded from the SSRN Electronic Paper Collection
location. When URLs wrap, you must copy and paste
them into your browser eliminating all spaces.
Paper ID: Harvard Law School, Olin Center for Law, Economics &
Business, Discussion Paper No. 246
Date: December 1998
Contact: STEVEN SHAVELL
Email: Mailto:shavell at law.harvard.edu
Postal: Harvard Law School
Hauser Hall 508
Cambridge, MA 02138 USA
Phone: (617)495-3668
Fax: (617)496-2256
Co-Auth: TANGUY VAN YPERSELE
Email: Mailto:tanguy at kub.nl
Postal: Tilburg University
P.O. Box 90153
5000 LE Tilburg, THE NETHERLANDS
Paper Requests:
Contact Nancy Knapp, John M. Olin Center for Law, Economics, and
Business at Harvard Law School, Hauser 506, Cambridge, MA 02138.
Mailto:nknapp at law.harvard.edu Phone:(617)496-1670. Fax:(617)
496-2256.
ABSTRACT:
This paper compares reward systems to intellectual property
rights (patents and copyrights). Under a reward system,
innovators are paid for innovations directly by government
(possibly on the basis of sales), and innovations pass
immediately into the public domain. Thus, reward systems
engender incentives to innovate without creating the monopoly
power of intellectual property rights, but a principal
difficulty with rewards is the information required for their
determination. We conclude in our model that intellectual
property rights do not possess a fundamental social advantage
over reward systems, and that an optional reward system--under
which innovators choose between rewards and intellectual
property rights--is superior to intellectual property rights.