A fine innovation economist

A few days ago Suzanne Scotchmer died. There have been a couple of warm appreciations of her and her work on innovation economics from Joshua Gans and Joel West. Her particular contribution was the argument, well supported by evidence, that the patent system does not incentivise cumulative innovation at all well because it does not share the returns to innovation between the first step and subsequent steps in the cumulative process. In a growing number of instances, such as biotech or digital technologies, successful innovation takes exactly this cumulative form.

I knew Suzanne when I was a graduate student at Harvard in the early 1980s and she was a young assistant professor. Then, as now, economics was very male-dominated and it was unspeakably encouraging to have a female role model who was highly supportive of students – and a normal human being too, warm, funny, with outside interests. (Juliet Schor was another who was at around the same time. Maybe it’s a lapse of my memory but I can’t remember any other women professors in the department at the time.) I last saw Suzanne at the 2009 Global Economic Symposium, when we shared a panel.

Shame on me, I’ve not read her 2004 book Innovation and Incentives.

Innovation and Incentives

Her 1991 Journal of Economic Perspectives paper, Standing on the Shoulders of Giants: Cumulative Research and the Patent Law (1991:1, pp 29-41), is well worth reading – it’s a free download. She notes that if the second inventor has some market power, prior agreements to share revenues can overcome the drawback of patent-based incentives. Defining patents quite narrowly can also help. However, she also argues that the problem supports the case for government funding of basic research made freely available to subsequent innovators, without patenting. Here is the conclusion:

“Patent policy is a very blunt instrument trying to solve a very delicate problem. Its bluntness derives largely from the narrowness of what patent breadth can depend on, namely the realized values of the technologies. As a consequence, the prospects for fine-tuning the patent system seem limited, which may be an argument for more public sponsorship of basic research.”

Suzanne’s death is a sad loss.

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