TPI Research Roundup
Welcome to the return of the Technology Policy Institute’s semi-frequent Research Roundup (or “TPIRR,” since everything in DC needs an acronym in order to be taken seriously). The TPIRR digs through the dark depths of research journals and working papers to bring you hand-selected, craftman-quality scholarship of the most recent vintage (note the subtle earthy tones, with hints of jasmine and citrus). More specifically, your friendly neighborhood research associate, Brandon Silberstein, painstakingly sorts through updates from SSRN, NBER, [everything else] so you don’t have to.
The criteria for inclusion in the TPIRR is only that we find the research interesting and think others in the tech policy world will, too. We will not necessarily agree with opinions or conclusions expressed by the research, so, to paraphrase Twitter feeds, a mention does not necessarily imply endorsement.
With today’s edition, the research roundup re-establishes itself as the pre-eminent and post-eminent (possibly currently-eminent as well) source for fascinating and riveting research on any and all topics technology-related.
This week, we highlight research on an IBM patent experiment and bring you some scintillating work on how to best leverage the power of the masses in research, the pros and cons of making your new products backwards compatible with old ones, and a primer on bitcoin.
Opening up IP Strategy: Implications for Open Source Software Entry by Start-Up Firms – Using IBM patent data, researchers show a strong relationship between certain strategic decisions (in particular, not asserting patents against Open Source Software (OSS) developers) and innovation by other companies. The authors conclude that the fear of patent litigation is a substantial barrier to development in the software world, and mitigating this risk could drive further innovation by small OSS developers.
The authors reviewed thousands of OSS product announcements, sorted them into 33 software categories, and then compared the number in each category to the number of patents in each sector IBM put into a non-litigation pool called “The Commons,” along with the remainder of IBM’s patent portfolio not included in The Commons. The authors found statistically significant correlations between an increased number of patents in The Commons and an increase in novel OSS market entries per sector, even after controlling for time fixed effects and other endogenous variables.
The authors’ conclusions imply that private companies could take unilateral strategic action, as IBM did, and create environments that encourage new OSS entrants into the market. By carving out a non-litigation exception for OSS competitors, companies can increase complementary innovation by startups, potentially strengthening their own positions by bolstering their market segment as a whole.
Author written abstracts:
Wen Wen, Marco Ceccagnoli, Chris Forman
We examine whether a firm’s IP strategy in support of the open source software (OSS) community stimulates new OSS product entry by start-up software firms. In particular, we analyze the impact of strategic decisions taken by IBM around the mid-2000s, such as its announcement that it will not assert its patents against the OSS community and its creation of a patent commons. These decisions formed a coherent IP strategy in support of OSS. We find that IBM’s actions stimulated new OSS product introductions by entrepreneurial firms, and that their impact is increasing in the cumulativeness of innovation in the market and the extent to which patent ownership in the market is concentrated.
Henry Sauermann, Chiara Franzoni
Scientific research performed with the involvement of the broader public (the “crowd”) attracts increasing attention from scientists and policy makers. A key premise is that project organizers may be able to draw on underutilized human resources to advance research at relatively low cost. Despite a growing number of examples, systematic research on the effort contributions volunteers are willing to make to crowd science projects is lacking. Analyzing data on seven different projects, we quantify the financial value volunteers can bring by comparing their unpaid contributions with counterfactual costs in traditional or online labor markets. The volume of total contributions is substantial, although some projects are much more successful in attracting effort than others. Moreover, contributions received by projects are very uneven across time – a tendency towards declining activity is interrupted by spikes typically resulting from outreach efforts or media attention. Analyzing user-level data, we find that most contributors participate only once and with little effort, leaving a relatively small share of users who return responsible for most of the work. While top contributor status is earned primarily through higher levels of effort, top contributors also tend to work faster. This speed advantage develops over multiple sessions, suggesting that it reflects learning rather than inherent differences in skills. Our findings inform recent discussions about potential benefits from crowd science, suggest that involving the crowd may be more effective for some kinds of projects than others, provide guidance for project managers, and raise important questions for future research.
Il-Horn Hann, Byungwan Koh, Marius F. Niculescu
We investigate the impact of the intergenerational nature of services, via backward compatibility, on the adoption of multi-generational platforms. We consider a mobile Internet platform that has evolved over several generations and for which users download complementary services from third party providers. These services are often intergenerational: newer platform generations are backward compatible with respect to services released under earlier generation platforms. In this paper, we propose a model to identify the main drivers of consumers’ choice of platform generation, accounting for (i) the migration from older to newer platform generations, (ii) the indirect network effect on platform adoption due to same-generation services, and (iii) the effect on platform adoption due to the consumption of intergenerational services via backward compatibility. Using data on mobile Internet platform adoption and services consumption for the time period of 2001 – 2007 from a major wireless carrier in an Asian country, we estimate the three effects noted above. We show that both the migration from older to newer platform generations and the indirect network effects are significant. The surprising finding is that intergenerational services that connect subsequent generations of platforms essentially engender backward compatibility with two opposing effects. While an intergenerational service may accelerate the migration to the subsequent platform generations, it may also, perhaps unintentionally, provide a fresh lease on life for earlier generation platforms due to the continued use of earlier generation services on newer platform generations.
Campbell R. Harvey
Cryptography is about communication in the presence of an adversary. Cryptofinance is the efficient exchange of ownership, the verification of ownership, as well as the ability to algorithmically design conditional contracts, all with security, privacy, and minimal trust without using centralized institutions. Our current financial system is ripe for disruption. At a swipe of a debit or credit card, we are at risk (think of Target’s breach of 40 million cards). The cost of transacting using traditional methods is enormous and will increase in the future. Cryptofinance offers some solutions. This paper explores the mechanics of cryptofinance and a number of applications including bitcoin. Also attached is a slide deck that I use in my graduate course.