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  • KDI Journal of Economic Policy, May 2020
  • Date May 30, 2020
  • Language Korean
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Injunctions and Hold-up under Weak Patent Protection / Kyoungbo Sim

This paper analyzes how injunctions relate to patent hold-up problems. To this end, we present a simple model of licensing negotiations between a patent holder and a downstream firm in the shadow of litigation. More specifically, we consider the situation in which an injunction is granted as a matter of course if a patent is found valid and infringed upon in litigation, but the patent holder may be under-compensated due to aspects of the patent remedy system other than injunctions. We show that if the downstream user is unaware of the patent before any investment in initially designing its product, the patent hold-up problems created by injunction threats are worrisome when (i) the redesign process is costly, (ii) the degree of patent protection (by aspects of the patent remedy system other than injunctions) is sufficiently strong and (iii) the injunction is requested not to practice the patented technology exclusively but to collect excessive patent royalties. Even if the downstream user is aware of the patent before the initial investment, the patent hold-up problems do not disappear. The findings here imply that a discretionary approach is required towards denying injunctions against patent infringement. If the degree of patent protection is not sufficiently strong, denying injunctions can exacerbate the under-compensation problem. However, once patent protection improves enough (not necessarily perfectly), we may see a surge of patent hold-up problems, and it would be better to apply alternative patent remedies in place of injunctions when necessary. Lastly, we discuss several possible alternatives to injunctions and their pros and cons.

Adopting Local Languages as Official Languages: Effect on Women and Rural Individuals’ Labor Force in Burkina Faso / Souleymane Yameogo

This study investigates the impact of the use of the main local languages in Burkina Faso (Moore, Dioula, Fulfulde) on labor force participation. Using Ethnologue language data, I compute the relative language distance reduction index, after which I use a probit/logit model and instrumental variable approach to account for language use policy endogeneity. This study finds that the use of the Moore language increases the likelihood of labor force participation by 36 percent, with a strong impact on women at 59 percent, nine times higher than men, and 38.3 percent for rural individuals, five times higher than individuals living in urban areas. The Dioula language exhibits comparable trends, while Fulfulde has a negative impact on individuals. The study recommends the use of local language(s) as official language(s) to improve labor force participation. However, a bilingual approach combining local and international language(s) will be of use to account for globalization and international competitiveness. The findings here may be of use to researchers and policymakers as part of their effort to increase the labor force participation rates of women and rural individuals. Moreover, this research has significant implications with regard to the implementation of language use policies in a variety of postcolonial language contexts.

International Inflation Synchronization and Implications / Sora Chon

This study analyzes global inflation synchronization and derives policy implications for the Korean economy. Unlike previous studies that assume a single global inflation factor, this study investigates if inflation in Korea can be explained further by other global inflation factors. Our principal component analysis provides three principal components for global inflation that are linked to the Korea inflation rate ― the first component is closely related to OECD inflation, and the second and third components reflect China’s inflation. This study empirically demonstrates via in-sample fitting and out-of-sample forecasting that the three principal components of global inflation play a significant role in explaining and predicting Korean inflation in the short-term, while their role is limited in the mid-term. Domestic macroeconomic variables are found to be more important for the mid-term movements of the Korean inflation rate. The empirical results here suggest that the Bank of Korea should focus more on domestic economic conditions than on global inflation when implementing monetary policy because global factors are likely to be already reflected in domestic macro-variables in the mid-term.
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    This paper analyzes how injunctions relate to patent hold-up problems. To this end, we present a simple model of licensing negotiations between a patent holder and a downstream firm in the shadow of litigation. More specifically, we consider the situation in which an injunction is granted as a matter of course if a patent is found valid and infringed upon in litigation, but the patent holder may be under-compensated due to aspects of the patent remedy system other than injunctions. We show that if the downstream user is unaware of the patent before any investment in initially designing its product, the patent hold-up problems created by injunction threats are worrisome when (i) the redesign process is costly, (ii) the degree of patent protection (by aspects of the patent remedy system other than injunctions) is sufficiently strong and (iii) the injunction is requested not to practice the patented technology exclusively but to collect excessive patent royalties. Even if the downstream user is aware of the patent before the initial investment, the patent hold-up problems do not disappear. The findings here imply that a discretionary approach is required towards denying injunctions against patent infringement. If the degree of patent protection is not sufficiently strong, denying injunctions can exacerbate the under-compensation problem. However, once patent protection improves enough (not necessarily perfectly), we may see a surge of patent hold-up problems, and it would be better to apply alternative patent remedies in place of injunctions when necessary. Lastly, we discuss several possible alternatives to injunctions and their pros and cons.

  • Read more

    This study investigates the impact of the use of the main local languages in Burkina Faso (Moore, Dioula, Fulfulde) on labor force participation. Using Ethnologue language data, I compute the relative language distance reduction index, after which I use a probit/logit model and instrumental variable approach to account for language use policy endogeneity. This study finds that the use of the Moore language increases the likelihood of labor force participation by 36 percent, with a strong impact on women at 59 percent, nine times higher than men, and 38.3 percent for rural individuals, five times higher than individuals living in urban areas. The Dioula language exhibits comparable trends, while Fulfulde has a negative impact on individuals. The study recommends the use of local language(s) as official language(s) to improve labor force participation. However, a bilingual approach combining local and international language(s) will be of use to account for globalization and international competitiveness. The findings here may be of use to researchers and policymakers as part of their effort to increase the labor force participation rates of women and rural individuals. Moreover, this research has significant implications with regard to the implementation of language use policies in a variety of postcolonial language contexts.

  • Read more

    This study analyzes global inflation synchronization and derives policy implications for the Korean economy. Unlike previous studies that assume a single global inflation factor, this study investigates if inflation in Korea can be explained further by other global inflation factors. Our principal component analysis provides three principal components for global inflation that are linked to the Korea inflation rate ― the first component is closely related to OECD inflation, and the second and third components reflect China’s inflation. This study empirically demonstrates via in-sample fitting and out-of-sample forecasting that the three principal components of global inflation play a significant role in explaining and predicting Korean inflation in the short-term, while their role is limited in the mid-term. Domestic macroeconomic variables are found to be more important for the mid-term movements of the Korean inflation rate. The empirical results here suggest that the Bank of Korea should focus more on domestic economic conditions than on global inflation when implementing monetary policy because global factors are likely to be already reflected in domestic macro-variables in the mid-term.

 
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Office of Global Economy
Providing Economic Forecast and Macroeconomic Policy Direction, the Groundwork for a Brighter Future

The Department of Macroeconomics is conducting researches on the macro economy and macroeconomic policy, particularly focusing on suggesting the analysis of macroeconomic trends and current status of the economy at home and abroad, the economic forecast, and the policy direction of the macro economy. The Department is also in charge of establishing, sustaining and maintaining various econometric models, based on which it analyses policy effects and develops a long-term economic forecast.

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