Marc Baudry is professor of economics at Paris-Nanterre University where he is the head of the Department of Economics. He is also co-manager of the research program “CO2 pricing and low-carbon Innovation” at the Climate Economics Chair. With Beatrice Dumont, he co-authored the book “Patents: prompting or restricting innovation? » which has just been published by Wiley-ISTE.
What is the interest of publishing a book about patents as part of the Climate Economics Chair ?
There is a kind of « black-and-white » debate about the role of patents in the economy in general. On one hand, patents are anchored from at least one and a half century in the firms’ practices, with an acceleration these last years, according to patents’ demography across the world. On the other hand, the patent system is more and more challenged and criticized. Litigations related to patents are expanding, and that leads to a high uncertainty about invention protection efficiency. A patents thicket has emerged and economic analysis shows that it is counterproductive relating to innovation promotion. Moreover, patents, that intrinsically rely on a legal market power, are perceived as an instrument that rather aims at catching rents than at promoting innovations.
The book firstly highlights this debate. It brings to mind that concerning innovation there is no ideal economic policy instrument. This is essentially due to the need for the regulator to create incentives, in an asymmetric information situation, toward private actors for them to contribute to inventions that have the characteristics of public goods. The economic analysis shows that patents are a good compromise to reach this goal. However, the book shows that the evolution of the innovation system has induced a change in the role of patents during the last decades. Innovation is more and more open, that is to say co-constructed by different actors, via vertical co-operations (with costumers/suppliers), horizontal co-operations (with competitors) or between up and down of the innovation industry (academic world and firms’ world). This is reinforced by the facts that technological challenges require to mix different knowledges, to mobilize important R&D efforts, and that the actors are facing major uncertainties. They are all prerequisites particularly observable in the low-carbon innovation sector. Yet, the book highlights that patents are far from being contradictory with open innovation. Conversely, they go together. However, it is the signal of inventiveness they convey that prevails on their financial incentive function. They allow thus to ease the emergence of a ” market for technologies”.
What are the specificities of low-carbon innovations?
The first specificity of low carbon innovation is that it is “oriented”. Innovation is based on the accumulation of knowledge. However, knowledge is not always transferable between the different kinds of innovations (“green” versus other innovations). Then, to move an economy towards a low-carbon trajectory, we need to couple a carbon pricing tool in order to control the GhG stock to a tool aiming at paying off the deficit of knowledge required for low-carbon innovation. As it was already mentioned by Larry Goulder in the interview of the 23rd october, the economic analysis shows that the association of both tools is essential. Carbon pricing is necessary but not sufficient to induce the optimal level of low-carbon innovation. In the book, we devote a section to this question. The section explains that the generic incentives system in place for innovation, that is, patents, has to be completed by tools orienting the innovation effort. That partly explains the renewal of innovation prizes, especially of prizes in favor of low carbon innovation.
What does your commitment bring to the Chair regarding the theme of low carbon innovation?
There are relatively few research centers in Economics that focus on innovation and then, a fortiori, that mix innovation and environmental issues. Innovation economy and environmental economics are two distinct fields that are developing still independently. The Chair offers the opportunity to conduct research at the crossroads of these two fields and, for young researchers, this is the opportunity to move in this direction. At the annual conference of the chair last October, the presentation of Clément Bonnet, who realized his PhD thesis under my direction, attracted a lot of interest. He has provided evidences that including “quality” aspects of inventions into the measurement and monitoring of low-carbon innovation was necessary. Some actors have high expectations on such research issues.