Monthly Archives: September 2011

Of Gene Sequences and IP’s Ex Post Incentives: An Empirical Measurement of the Effect of “Celera’s IP”

Empirical studies of IP that measure the effect of IP on innovation are difficult to pull off.  The cleanest way to measure the effect of IP on innovation would be to run a controlled experiment in a laboratory setting: take two similarly situated groups of innovators, subject one group to a regime of exclusive rights and the other to a public-domain regime, and then sit back and watch the differences that evolve in the two groups. Unfortunately for economists, innovators cannot be treated like laboratory rats, so actively creating the control group that is required to measure the effect of IP on innovation ranges from the difficult, indirect, and expensive to the impossible. We usually have to make educated guesses about counterfactual scenarios: we just do not know for sure what would have happened if a real-world IP regime had not existed or had existed in a different form.

In her working paper of July, 2010 titled Intellectual Property Rights and Innovation: Evidence from the Human Genome (available as NBER working paper no. 16213), Professor Heidi L. Williams, an economist at MIT, overcomes the inability of scientists to create an experimental control group by identifying a rare natural experiment—a situation in which the real world provides two similarly situated groups, one of which is subject to an IP regime and one of which is not. In Williams’ words, “[t]he contribution of this paper is to identify an empirical context in which there is variation in IP across a relatively large group of ex ante similar technologies, and to trace out the impacts of IP . . . .” (P. 1.) Continue reading "Of Gene Sequences and IP’s Ex Post Incentives: An Empirical Measurement of the Effect of “Celera’s IP”"