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IT Ecosystem

IT and Public Policy – Oct. 7, 2004. IT Ecosystem. Inventing Institutions. Stephen M. Maurer Goldman School of Public Policy. Introduction. An IT Ecosystem?. What’s An Ecosystem? • Evolution & History • Accidents & Optimization The Usual Suspects

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IT Ecosystem

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  1. IT and Public Policy – Oct. 7, 2004 IT Ecosystem Inventing Institutions Stephen M. Maurer Goldman School of Public Policy

  2. Introduction An IT Ecosystem? What’s An Ecosystem? • Evolution & History • Accidents & Optimization The Usual Suspects • Patents, Contracts, Grants, Prizes . . .

  3. Introduction Hybrids New Experiments Government/Industry • Contracts + IP • “CRADAs” Academic/Industry • Grants + Patents • “Bayh-Dole”

  4. Introduction Hybrids Can Hybrids Do Better? • DWL, Innovation, Eliciting Innovation & Agency Problems • Political Risks

  5. Government - Industry Partnerships

  6. Government - Industry Partnerships Examples • CRADAs, SBIR Grants, State Grants, University Grants, Incubators Naïve Objection: • Patents + Public Money = DWL + Agency Problems

  7. Government - Industry Partnerships Why Hybrids? Reason to Believe That . . . Patents Might Fail and Contracts Might Fail

  8. Government - Industry Partnerships • Why Patents Might Not Work . . . • High cost • • Small vs. Big Projects • • Financial markets • 2. High risk • • Technical and market risk • • Financial markets

  9. Government - Industry Partnerships • Why Patents Might Not Work . . . • Appropriability • • IBM, AT&T . . . and Microsoft? • Insufficient Patent Reward • • (Π•v – c) > 0

  10. Government - Industry Partnerships A Tough Standard! Political Hazards Iron Triangles & Hidden Taxes Be Skeptical! Why Use Not Contracts? • No DWL!

  11. Government - Industry Partnerships Why Contracts Might Not Work . . . Agency Problem – Researchers • Estimated (v-c) • Going to the Beach

  12. Government - Industry Partnerships • In Other Words . . . • 1. Government Cannot Monitor Performance • - or - • Government Cannot Pick Winners • • Private Sector Knowledge of (v-c). • • Conventional Wisdom • • Incubators

  13. Government - Industry Partnerships When Patents and Contracts Don’t Work . . . . . . Can Hybrids Help?

  14. Government - Industry Partnerships The Goal: (v-c) Note: • (v,c) space c (v – c) > 0 v

  15. Government - Industry Partnerships Patents: (Π•v - c) > 0 c (v – c) > 0 v

  16. Government - Industry Subsidies: (Π•v + s - c) > 0 Partnerships c Note: • Assumes government can’t observe (v-c) (v – c) > 0 v

  17. Government - Industry Subsidies: (Π•v + s - c) > 0 Notes • The SST Partnerships c Inefficiency Subsidy (v – c) > 0 v

  18. Government - Industry Partnerships Matching Payments Notes • Sematech • Venture Star • The New SST c No Subsidy Requested Π Matching Payment v

  19. IT and Public Policy – Oct. 7, 2004 IT Ecosystem Inventing Institutions Stephen M. Maurer Goldman School of Public Policy

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