Eric S. Maskin and software patents

Eric S. Maskin has just been awarded the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, often called Nobel Prize in Economics. He shares the prize with Leonid Hurwicz and Roger B. Myerson. They are rewarded for having laid the foundations of mechanism design theory (also known as implementation theory), a theory that tries to define conditions for a structured market (in particular in the context of auctions) to function well. Eric Maskin’s work is particularly relevant to the design of environment related market instruments such as carbon emission trading systems. But Eric S. Maskin may be known to readers of this blog for another reason. He is the co-author of the landmark 2000 Bessen-Maskin paper on the relationship between sequential innovation, patents and investment in R&D. This work played a significant role in the debate on software patents as it pioneered a series of work that demonstrated that far from acting as a R&D incentive, patents act as a disincentive in domains where incremental innovation is important (such as software). Later work addressed the same issue from a qualitative perspective, showing that the nature of innovation targets is also affected by an increase in patentability in these industry: dominant players tend to adopt rent seeking behaviour by focusing on defensive innovation (innovation that makes more difficult for new entrants to enter the market or that enables them to increase the duration of market control through technical change that does not provide true user value). The Bessen-Maskin paper is testimony to only one of the facets of Eric S. Maskin’s talents, who besides mechanism design theory also worked on salary inequalities and their consequences, but it deserves mention and thanks.

This post is also available in: French

No Comments

Leave a Reply

Your email is never shared.Required fields are marked *