Interest in intellectual property and other institutions that promote innovation exploded during the 1990s. Innovation and Incentives provides a clear and wide-ranging introduction to the economics of innovation, suitable for teaching at both the advanced undergraduate and graduate levels. It will also be useful to legal and economics professionals. Written by an expert on intellectual property and industrial organization, the book achieves a balanced mix of institutional details, examples, and theory. Analytical, empirical, or institutional factors can be given different emphases at different levels of study. Innovation and Incentives presents the historical, legal, and institutional contexts in which innovation takes place. After a historical overview of the institutions that support innovation, ranging from ancient history through today's government funding and hybrid institutions, the book discusses knowledge as a public good, the economic design of intellectual property, different models of cumulative innovation, the relation of competition to licensing and joint ventures, patent and copyright enforcement and litigation, private/public funding relationships, patent values and the return on R&D investment, intellectual property issues arising from direct and indirect network externalities, and globalization. The text presents technical and abstract analysis and at the same time sheds light on current controversies and policy-relevant topics, including the difficulty of enforcing copyright in the digital age and international protection of intellectual property. Table of Contents Preface ix 1 Institutions: A Brief Excursion through History with Stephen M. Maurer 1 2 Investing in Knowledge 31 3 A Primer for Nonlawyers on Intellectual Property with Stephen M. Maurer 65 4 On the Optimal Design of Intellectual Property 97 5 Standing on the Shoulders of Giants: Protecting Cumulative Innovators 127 6 Licensing, Joint Ventures, and Competition Policy 161 7 Litigation and Enforcement 197 8 Innovation Today: A Private-Public Partnership with Stephen M. Maurer 227 9 The Value of R&D and Patents 259 10 Networks and Network Effects 289 11 Innovation in the Global Economy 319 Index