Browsing by Author "Llanes, Gaston"

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    Anticommons and Optimal Patent Policy in a Model of Sequential Innovation
    (WALTER DE GRUYTER GMBH, 2011) Llanes, Gaston; Trento, Stefano
    We present a model of sequential innovation in which innovators use several research inputs to invent new goods. We extend work by Shapiro (2001) and Lerner and Tirole (2004) by studying the effects of increases in the number of patented research inputs on innovation incentives and optimal patent policy. We consider not only the effects on the incentives to invent final goods, but also on the incentives to invent research inputs (ex-ante effect). We find increasing complexity has a negative effect on innovation activity in the final goods sector when research inputs are complements. Either limiting market power through weaker patents or reducing the lack of coordination through patent pools may solve this problem. We also find the optimal patent breadth and show it is increasing in the elasticity of substitution between the inputs used in research and decreasing (increasing) in the complexity of the R&D process when research inputs are complements (substitutes).
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    Entry into Complementary Good Markets with Network Effects
    (2019) Llanes, Gaston; Mantovani, Andrea; Ruiz-Aliseda, Francisco
    Network effects and complementarities are salient features of the digital economy. We examine whether complementarities can help a firm enter a market with strong network effects and incumbency advantages. We provide conditions under which bundling the network good with a complementary good can be an optimal entry strategy, and we show that this strategy should not be subject to anticompetitive concerns (in both the short and the long term). When product complementarity is weak enough, we also show that an entrant may prefer a more cooperative approach not based on bundling but rather on extending the complementarity benefits to the incumbent's network good.
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    Mixed Source
    (INFORMS, 2011) Casadesus Masanell, Ramon; Llanes, Gaston
    W e study competitive interaction between a profit-maximizing firm that sells software and complementary services, and a free open-source competitor. We examine the firm's choice of business model between the proprietary model (where all software modules are proprietary), the open-source model (where all-modules are open source), and the mixed-source model (where some-but not all-modules are open). When a module is opened, users can access and improve the code, which increases quality and value creation. Opened modules, however, are available for others to use free of charge. We derive the set of possibly optimal business models when the modules of the firm and the open-source competitor are compatible (and thus can be combined) and incompatible, and show that (i) when the firm's modules are of high (low) quality, the firm is more open under incompatibility (compatibility) than under compatibility (incompatibility); (ii) firms are more likely to open substitute, rather than complementary, modules to existing open-source projects; and (iii) there may be no trade-off between value creation and value capture when comparing business models with different degrees of openness.
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    Patent policy, patent pools, and the accumulation of claims in sequential innovation
    (2012) Llanes, Gaston; Trento, Stefano
    We present a dynamic model where the accumulation of patents generates an increasing number of claims on sequential innovation. We compare innovation activity under three regimes-patents, no-patents, and patent pools-and find that none of them can reach the first best. We find that the first best can be reached through a decentralized tax-subsidy mechanism, by which innovators receive a subsidy when they innovate, and are taxed with subsequent innovations. This finding implies that optimal transfers work in the exact opposite way as traditional patents. Finally, we consider patents of finite duration and determine the optimal patent length.