Technological Innovation and Intellectual Property

I was thrilled to read that Eric Maskin won the Nobel prize for economics along with Leonid Hurwicz and Roger Myerson. They won the prize for mechanism design theory, an elegant and very general mathematical theory for analyzing the best way to align incentives between parties. This has been applied to problems of designing optimal contracts between two private parties and also to designing effective government regulation.

Eric is a friend and, informally, a teacher to me. As my college roommate, he introduced me to economics and has provided guidance and encouragement since. And we are co-authors of “Intellectual Property on the Internet: What’s Wrong with Conventional Wisdom?” (published in German in Open Source Jahrbuch 2005: Zwischen Softwareentwicklung und Gesellschaftsmodell) and “Sequential Innovation, Patents and Imitation” (an improved version forthcoming in the RAND Journal of Economics). The latter paper surprised us and became quite controversial; in it we question whether patent protection might not be the best policy in technology fields that were already highly innovative, such as software. This paper has been widely seen as influencing European legislative deliberations regarding software patents.

But Eric’s contribution to economics goes well beyond mechanism design and intellectual property. Eric has played a seminal role in bringing mathematical analysis, especially game theory, to economics. David Warsh, writing in the Boston Globe several years ago, saw the significance of Eric’s role symbolically: when Eric went to the Institute for Advanced Study in Princeton from Harvard, he moved into the house where Albert Einstein had lived.

Best wishes on a well-deserved honor.

–Jim Bessen

See also, Philippe Aigrain’s blog