Platforms for Technology: An Alternative to Markets for Know-how

Abstract

This paper addresses recent failures in the market for know-how with regards to the development of complicated, integrated network technologies. The market failure is manifested in attempts to manipulate the market for patent rights, to extract higher royalties for the transfer of "must-have" technology. The observed manipulation is not the problem however, but a symptom of a system that is unable to provide the central planning and coordination required for technology integration. We argue that technology platforms in which the development and exchange of technology is centrally planned and governed by liability rules is a superior alternative.