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IT Ecosystem

Explore the dynamics of government-industry collaborations in IT ecosystems, analyzing patents, contracts, grants, and potential pitfalls. Delve into hybrid models, political risks, and the balance between incentivizing innovation and avoiding deadweight loss. Learn about effective strategies and examples of successful partnerships.

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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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