Profitable Advice: The Value of Information Provided by Canadas Inventors Assistance Program

T. B. ASTEBRO, Y. Gerchak

Economics of Innovation and New Technology

2001, vol. 10, n°1, pp.45-72

Departments: Economics & Decision Sciences, GREGHEC (CNRS)

Keywords: Value of information, Inventors, Social benefit, Inventor's assistance program

Inventors who are considering whether and how to commercialize their inventions. can often avail themselves to evaluations and advice provided by government supported programs initiated to encourage innovation. In Canada. such a service is provided by the Canadian Innovation Centre. through its Inventor's Assistance Program. In its twenty years of operations the IAP has evaluated 11,000 inventions. The fee charged for an invention evaluation was Cdn. $262 in 1995, and these fees covered about half the program's expenses. We compute the expected value of the information the IAP's evaluation provides under different assumptions and scenarios. Under plausible conditions, the value of the information to the inventor is found to be higher than both the fee and the social cost of the program. The implications of some inventors not following the advice given to them by the IAP are briefly explored.