Three essays in law and economics

Intellectual property. To obtain a patent, an invention must be nonobvious, i.e., a nontrivial advance of the prior art. During the 1980\u27s, a number of reforms relaxed the nonobviousness requirement for inventions in all industries and semiconductors in particular. In Chapter One, a model of sequential innovations is used to examine the effect of weaker nonobviousness requirements on the incentive of firms to engage in research and development (R&D). The findings are ambiguous: While the probability of obtaining patents increases, the value of patents decreases. The latter effect is more likely to dominate the former in industries that innovate rapidly. Chapter Two provides estimates of the contribution of firm R&D stocks, rivals\u27 R&D stocks, and spillovers to the ratio of the firm\u27s market and replacement values (Tobin\u27s Q) for a dozen semiconductor firms over the years 1976-1994. A structural change occurred during the 1980\u27s. The contribution to market value of R&D investments made by firms and their rivals increased significantly. Spillovers, which initially contributed to the value of firm R&D investments, began reducing their value. The net effect on the value of R&D investments is ambiguous. Criminal deterrence. Chapter Three develops a model that links the interaction of the police and the courts to the level of deterrence attained. The police face a trade off between the quantity and quality of their investigations. The quality of investigations affects the conviction rate. Increasing police resources always reduces crimes. Increasing penalties or the arrest rate can have ambiguous effects on the crime rate. Relaxing the exclusionary rule may deter more crime, but can also increase the probability of erroneous arrest and conviction. Diminishing returns create an incentive for the police to concentrate resources in areas with low crime rates or on certain categories of crimes