CAOT 31 Lecture Notes - Lecture 5: Airline Reservations System, Intangible Asset, Network Effect
3 Oct 2020
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Document Summary
Man 693 strategic ip-management: economics of ip. Intellectual property (ip) refers to the output of a creative process such as an invention. It entails the following three components: it is intellectual, i. e. it is a product of the mind it is an intangible asset. Obtain an official mark of recognition of ownership keep it secret. Value drivers: nonrivalry & scalability, network effects. Value detractors: partial excludability & spillovers, nontradability. Physical, human and financial assets are rival assets. Intangibles are often non rival their production requires a fixed (sunk cost) effort, but producing one more unit of output from them carries very low or zero costs example: bookings on an airline reservation system. Economic implication scalability: returns to scale are not diminishing quickly. Definition: one"s benefit from being part of an (economic) network increases with the number of other agents connected to the network. Network types: physical (phone, fax, railroad tracks) or virtual (vhs cassette users, microsoft word users).
